Dividend Aristocrat Overview: Automated Data Processing, Inc.

About Automated Data Processing (ADP)

Automated Data Processing, Inc. is the world’s largest provider of human resources and business processing solutions.  ADP employs over 60,000 people to serve nearly 620,000 businesses, including more than 400 Fortune 500 companies, and operates in 125 countries around the world.

The company is a member of the S&P 500 index and is traded under the ticker symbol ADP.

ADP’s Dividend and Stock Split History

ADP became a Dividend Aristocrat in 2000 and in 2013 increased their dividend for the 38th consecutive year.  The company began paying dividends in 1974 and began increasing them in 1976.  ADP increased their dividend by over 10%, with the quarterly payout increasing from 43.5 cents to 48 cents in November 2013, resulting in an annualized dividend payout of $1.92.  ADP usually increases the quarterly dividend in the 4th quarter of the calendar year, although in 2007 they announced a two dividend increases – one in the 2nd quarter and one in the 4th quarter of the calendar year.

ADP has an excellent record of compounding its annual dividend.  With only a few exceptions, the company has increased the dividend by at least 10% each year.  Unfortunately, three of the exceptions occurred from 2010 – 2012 with respective increases in each year of 3.76%, 6.88% and 9.83%.  This results in the company having a 5 year compounded dividend growth rate of 8.27%.  The results for longer periods are significantly better – the 10-year, 20-year and 25-year compounded dividend growth rates are 14.80%, 14.78% and 14.84%, respectively.  Since ADP became a Dividend Aristocrat in 2000, the compounded growth rate is 13.92%.

ADP has split their stock six times; each was a 2 for 1 split.  These 2 for 1 splits occurred in July 1976, May 1981, June 1986, April 1991, December 1995, and most recently in January 1999.  One share purchased in January 1976 would now be 64 shares that paid a total of $114.24 in dividends in 2013.

Direct Purchase and Dividend Reinvestment Plans

ADP does not have either a direct stock purchase or a dividend reinvestment plan.  The easiest way for individual investors to purchase the stock is through their online broker, and most brokers can automatically reinvest dividends with either no fee or, at most, a minimal fee.

Helpful Links

ADP’s Investor Relations

Current quote and financial summary (links to finviz.com)