On Wednesday, November 11, the Board of Directors of Automatic Data Processing, Inc. (ADP) announced an increase in its quarterly dividend from $1.70 to $1.90 per share. The new dividend is payable on January 1, 2027, to shareholders of record on December 11, 2026. This represents an 11.8% increase over the previous quarterly dividend.
Current Dividend Yield and Income Impact
With ADP trading at $309.93 at yesterday's close, the new quarterly dividend brings its forward dividend yield to approximately 2.45%.
As an owner of 35 shares of ADP, this increase adds $20.86 to my projected annual net dividend income.
I purchased ADP shares in February of this year, so this is the first dividend increase I've received as a shareholder. The raise seems to be in line with the company's long-term dividend growth trend, and I'm very pleased with it.
Long-Term Dividend Growth Track Record
According to Justin Law's Dividend Champions list, Automatic Data Processing is a Dividend Champion, with 50 consecutive years of dividend growth. The latest announcement also marks the company's 52nd consecutive year of dividend increases.
Based on calendar years, ADP's dividend growth rates over the 1-, 3-, 5-, and 10-year periods are 10.0%, 14.0%, 11.1%, and 12.1%, respectively.
Annual Growth Picture
ADP has built an impressive dividend growth record over more than five decades. Its latest increase continues that tradition, while the 11.8% raise is consistent with the company's strong historical growth over longer periods.
Quick Valuation Take
At $310.74 per share and a forward dividend yield of approximately 2.45%, ADP is not primarily a high-yield investment. Its appeal lies more in its long dividend growth history and the potential for continued dividend and earnings growth.
Investors should also consider the valuation relative to the company's earnings growth prospects. A strong dividend record is attractive, but the price paid remains important for long-term returns.
Dividend Safety and Outlook
ADP's long history of annual dividend increases demonstrates a strong commitment to returning cash to shareholders. Its recurring revenue from payroll and human resources services provides a foundation for relatively predictable cash generation.
However, dividend growth ultimately depends on continued business performance, earnings growth, and cash flow. Economic slowdowns and weaker employment trends could affect demand for ADP's services, making these factors worth monitoring.
Final Thoughts
I'm pleased with my first dividend increase from ADP. An 11.8% raise is a solid result and fits well with the company's long-term dividend growth record.
At the time of writing, ADP represents approximately 1.00% of my portfolio and contributes around 0.69% of my future annual dividend income.
Following this increase, my yield on cost is 3.78%.
Summary of 2026 Dividend Increases / Cuts
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You can follow the development of my dividends here.
Full Disclosure: Long ADP
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