ADP - Automatic Data Processing Q3: Double Digit Dividend Growth Likely To Continue

2024-05-02 07:30:00 ET

Summary

• Automatic Data Processing is a high-quality dividend growth stock that has outperformed the S&P 500 in total return.
• ADP has achieved dividend aristocrat status with 25 consecutive years of dividend raises, and its dividend growth rate has remained in the double digits.
• Despite trading near the top of its price range, ADP has potential for double-digit gains based on my dividend discount model. Fair estimated value lies around $270 per share.
• With a growing FCF and cash from operations, ADP is well-suited to handle any potential headwinds.

Overview

Even though I love high yields that can be produced from different asset classes such as REITs, Business Development Companies, Or Closed End Funds, there will also be a place in my portfolio for high quality dividend stocks that can provide a growing stream of income but also solid capital appreciation. Automatic Data Processing ( ADP ) is one of those high quality dividend growth stocks that has consistently outperformed expectations. While the current dividend yield is low at 2.3%, the dividend growth rate has remained in the double digits throughout the last decade. This kind of dividend growth has the power to turn a small puddle of dividends into a growing river of cash flow over time....

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