Recent Buy: Automatic Data Processing (ADP)

I recently added to my position in Automatic Data Processing (ADP) with the purchase of 7 shares at around $260 per share. ADP is a company I’m happy to continue building over time given its exceptional dividend track record and highly durable business model.

This was not a new position for me. I first initiated my ADP holding in June 2024, when I purchased 8 shares. That initial buy was about getting exposure to one of the highest-quality dividend growth companies in the market, and this recent purchase builds on that foundation.

My total ADP position now stands at 15 shares.

Business Performance Since My First Purchase

Since my initial buy in mid-2024, ADP has continued to execute well operationally and strategically.

The company has benefited from:

• Ongoing demand for payroll and human capital management (HCM) services, supported by high client retention and recurring revenue.

• Growth in employer services and PEO offerings, which continue to expand margins over time.

• Product and platform enhancements, including increased use of data analytics, automation, and AI-driven tools to improve client efficiency and stickiness.

• Strategic acquisitions, such as the WorkForce Software deal, which strengthened ADP’s workforce management capabilities and supported long-term growth expectations.

ADP’s business model remains highly resilient, with strong free cash flow generation across economic cycles — a key reason it remains a core dividend holding for me.

Dividend Growth Update

Dividend growth is the main reason I own ADP.

Since my first purchase in 2024, ADP has continued its long-standing tradition of annual dividend increases. The quarterly dividend has risen from $1.54 per share at the time of my initial purchase to $1.70 per share, bringing the annual dividend to $6.80 per share.

That represents an increase of 10%, since I first bought the stock.

ADP has now raised its dividend for more than 50 consecutive years, firmly placing it among the elite dividend growth companies. This consistency is exactly what I look for when building long-term income streams.

Valuation Thoughts

At around $260 per share, ADP is not a bargain-basement stock, but quality rarely is. At this price, the stock offers:

• A dividend yield in the mid-2% range

• Reliable mid-single-digit to high-single-digit dividend growth

• Exceptional business stability and predictability

For a Dividend King with ADP’s track record, this valuation feels reasonable for long-term investors focused on income growth rather than short-term price movements.

Impact on My Dividend Income

This purchase increases my forward annual dividend income from ADP by approximately $47.60 (7 shares × $6.80).

With 15 shares total, ADP now contributes over $100 per year in dividend income to my portfolio — income that I fully expect to continue growing year after year.

Final Thoughts

Adding to ADP was an easy decision. The company continues to deliver steady earnings growth, consistent dividend increases, and strong cash flow generation. While the stock may not always look cheap, its reliability and income growth make it a cornerstone holding for a dividend-focused portfolio.

I’m happy to keep accumulating shares over time and letting compounding do the heavy lifting.