This week, seven of the portfolio holdings ranked in the Top 10.
| Ticker | Account Value |
| BDX | 3,834.01 |
| CMCSA | 3,193.70 |
| HTO | 3,610.77 |
| PEP | 3,325.34 |
| PPG | 3,705.57 |
| QCOM | 3,583.86 |
| VZ | 6,995.04 |
The lowest amount belongs to CMCSA. However, there exists a position imbalance such that only UHT is eligible for additional investment. Unfortunately, it is not ranked in the Top 10. That can only mean one thing.
It is time to add a new position to the Portfolio for the Ages!
Automatic Data Processing, Inc.
See my post from 2024-11-08 capturing the coronation of this fine company. In that post, you’ll find their profile and an indication of where they fit within the growing list of Dividend Kings.
The Details
Data as of 2025-10-24
| Name | Automatic Data Processing, Inc |
| Ticker | ADP |
| Website | Investor Relations |
| Sector | Industrials |
| Dividend Streak | 51 years |
| Last Price | $257.87 |
| Div Amt (quarterly) | $1.70 |
| Ann Dividend | $6.80 |
| Last Ann Div Inc | 10.1% |
| Dividend Yield | 2.6% |
| Payout Ratio (ttm) | 60.6% |
| Beta (5-yr, mon) | 0.85 |
| P/E Ratio (ttm) | 25.38 |
Reasons to Invest
In my post on 2024-11-08, I wrote the following:
“Charles Schwab and Royal Dividends prefer to use S&P Global, Inc.’s Global Industry Classification Standard (GICS) to define a company’s sector and industry, but it isn’t perfect. ADP does not really seem like an ‘Industrial’ and their industry stands alone in the table above [Human Resource & Employment Services]. In fact, Yahoo! Finance does not use the GICS, and they have the sector as ‘Technology’ and the industry as ‘Software – Application’. ADP is a sneaky way to add a technology stock to one’s portfolio.
It’s also a way to add a bit of an insurance company to a portfolio. ADP receives funds from its clients to safely hold until those funds are dispensed as compensation to the employees of those clients. On ADP’s books, the funds look like a massive amount of short-term debt. But those client obligations behave more like insurance float. ADP can place those funds in low-risk investments to generate additional income for itself.“
Those two characteristics, being a technology company and benefiting from a massive amount of cash that belongs to its clients, make ADP a very attractive company. And so do the following fair value estimates.
CFRA has a 12-month target of $300.00.
Sure Dividend has a fair value of $305.00.
Personally, I think ADP is trading at a reasonable level and that it is just a matter of time before it gets back above $300 because the earnings trajectory is fantastic.
Shares of ADP reached an all-time high of $329.93 on 2025-06-02. Since then, the price has come down 22%. However, the rolling year over year EPS increase is 8.5% and they just announced a 10.5% increase to the quarterly dividend. I can think of no real reason for ADP to have dropped off so much other than that it got a bit over its skis trading near $330, so some consolidation was expected.
The current P/E ratio of 25 is a bit lower than the average P/E ratio of 29 seen over the last decade.
The payout ratio has been very slowly climbing for the last 17 years, never getting above 70% and resting comfortably just above 60% right now. One can almost see how the past 4 quarters is perfectly representative of just how the ratio has been incrementally increasing: EPS growing 8.5% and the dividend increase of 10.5%. Incidentally, those two numbers are just two more reasons to invest in ADP.
Those are the numbers of a growth company, not a juggernaut with 51 consecutive years of dividend increases.
Quarterly earnings will be announced before market open this Wednesday.
Royal Dividends will be acquiring 4 shares of ADP on Monday morning.