Updated on July 7th, 2025 By Felix Martinez
The Dividend Kings are a select group of stocks that have increased their dividends for at least 50 consecutive years. We believe the Dividend Kings are among the highest-quality dividend growth stocks to buy and hold for the long term.
With this in mind, we created a full list of all the Dividend Kings. You can download the full list, along with important financial metrics such as dividend yields and price-to-earnings ratios, by clicking the link below:
Automatic Data Processing (ADP) is a member of the Dividend King list. This article will provide an overview of the company’s business, its growth prospects, competitive advantages, and expected returns.
Business Overview
Automatic Data Processing (ADP) is a global leader in business outsourcing services, specializing in payroll processing, human resources technology, and other business operations solutions. Founded in 1949, ADP serves over 700,000 corporate clients worldwide, offering innovative and reliable tools to streamline workforce management. The company has established itself as a trusted partner for businesses of all sizes, leveraging its extensive expertise and technology-driven approach.
With a market capitalization of $125 billion and generating approximately $18.2 billion in annual revenue, ADP is a financially robust enterprise. It has consistently rewarded shareholders with 50 consecutive years of dividend growth, making it a prestigious member of the Dividend Aristocrats Index and the Dividend King list. This track record highlights ADP’s stability, strong cash flow, and long-term commitment to growth and shareholder value.
ADP reported fiscal Q3 2025 revenues of $5.6 billion, up 6% (6% organic constant currency) from $5.3 billion in Q3 2024. Net earnings rose 5% to $1.2 billion, with adjusted net earnings also up 5% to $1.2 billion. Adjusted EBIT increased 6% to $1.6 billion, with the adjusted EBIT margin up 10 basis points to 29.3%. Diluted EPS and adjusted diluted EPS both grew 6% to $3.06. The effective tax rate was 23.0% on both reported and adjusted bases.
Segment performance included Employer Services revenues up 5% (5% organic constant currency), with a 20-basis-point margin increase and 1% growth in U.S. pays per control.
PEO Services revenues grew 7%, with revenues excluding zero-margin benefits pass-throughs up 8%, average worksite employees up 2% to 748,000, and a flat margin. Interest on client funds rose 11% to $355 million, with average client funds balances up 7% to $44.5 billion and yield up 10 basis points to 3.2%.ADP raised its fiscal 2025 outlook for adjusted EBIT margin expansion to 40–50 basis points (from 30–50) and adjusted diluted EPS growth to 8–9% (from 7–9%), while reaffirming revenue growth of 6–7%.
Employer Services expects 6–7% revenue growth and 50–60 basis-point margin expansion. PEO Services anticipates 6–7% revenue growth (5–6% ex-pass-throughs) and a 60–80 basis-point margin decline. Client funds interest is projected at $1.16–$1.17 billion. CEO Maria Black highlighted intense client satisfaction and market-leading offerings, positioning ADP for sustainable growth.
Source: Investor Presentation
Growth Prospects
ADP’s growth prospects are supported by its strong market position in human capital management (HCM) solutions and its continued investment in innovative technologies. The company’s recent acquisition of WorkForce Software expands its workforce management capabilities for large, global enterprises, enhancing its competitive edge in the enterprise market. Additionally, the launch of ADP Lyric HCM, a flexible and intelligent global HR platform, signals ADP’s focus on addressing the evolving needs of its clients by offering comprehensive and user-centric solutions. These strategic moves position ADP to capture new business opportunities and maintain its leadership in the HCM industry.
The company’s financial stability further supports its growth potential. With consistent revenue growth, strong margins, and a robust balance sheet, ADP is well-positioned to pursue further acquisitions and strategic investments. Its diverse client base of over 700,000 businesses provides a steady revenue stream while rising demand for payroll and HR outsourcing creates opportunities for organic growth. Additionally, ADP benefits from increasing interest on funds held for clients, contributing to higher margins and incremental income.
ADP’s long-term growth is also tied to macroeconomic trends, including rising global demand for workforce automation and data-driven HR solutions. The shift toward remote work and global workforce management presents new opportunities for ADP to expand its services. By leveraging its technological expertise, extensive data resources, and proven ability to innovate, ADP is well-positioned to sustain growth, expand its global footprint, and continue to deliver value to its shareholders.
Source: Investor Presentation
Competitive Advantages & Recession Performance
ADP’s competitive advantages derive from its strong market position, extensive client base, and innovative technology solutions. Serving over 700,000 businesses globally, the company benefits from scale and diversification, reducing dependency on any single market or client. Its comprehensive suite of payroll, HR, and workforce management solutions offers businesses seamless integration and efficiency, making ADP a preferred provider in the human capital management (HCM) space. Additionally, ADP’s data-driven insights and unmatched client funds investment capabilities further differentiate it from competitors.
ADP has proven its resilience during economic downturns, supported by its recurring revenue model and essential service offerings. Businesses continue to rely on payroll and compliance solutions regardless of economic conditions, ensuring a steady income stream for ADP. The company’s ability to maintain high client retention rates, even in challenging times, highlights its trusted reputation and the stickiness of its services.
During recessions, ADP’s diversified portfolio and focus on operational efficiency help mitigate risks. For example, while slower employment growth may temporarily impact its client base, ADP’s investment in technology and cost-saving solutions for businesses ensures continued demand for its services. This combination of financial stability and adaptability enables ADP to weather economic challenges while maintaining long-term growth prospects.
During the Great Recession of 2008-2009, it steadily grew earnings-per-share each year in that time:
- 2007 earnings-per-share of $1.58
- 2008 earnings-per-share of $1.91 (21% increase)
- 2009 earnings-per-share of $2.10 (10% increase)
- 2010 earnings-per-share of $2.08 (1% decrease)
Valuation & Expected Total Returns
ADP shares currently trade at $308. Using our earnings-per-share estimate of $10.00, we see that the stock has a price-to-earnings ratio 30.3x for the current fiscal year. This is above our fair value estimate P/E ratio of 29x.
If the valuation multiple were to revert to our fair value estimate over the next five years, the company’s total returns would decline by 0.9% per year. ADP shares have performed well for an extended period. While this has rewarded shareholders with strong returns, we view ADP as a slightly overvalued stock.
Aside from changes in the P/E multiple, ADP should also generate returns from earnings growth and dividends. A projection of expected returns is below:
- 8% earnings-per-share growth
- 2% dividend yield
- -0.9% multiple reversion
In this scenario, ADP is projected to generate a total annual return of 9.1% over the next five years.
Final Thoughts
The company has performed well, achieving high total returns over the past five years. We find the company’s dividend track record impressive, with the most recent dividend hikes of 10%.
ADP is a safe, defensive stock during economic hardship; our projected total return profile meets our criteria for a hold recommendation when the total return is under 10% annually for the next five years. As a result, we rate it a hold at the current price.
Additional Reading
The following databases of stocks contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors.
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta.
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks