Monday, July 13, 2015

Paychex symbol PAYX the next 2015 Dividend Machine

I just returned from a visit to Grace Patriot Winery where the owner took us on a tour and reviewed the complexities of running a winery.   Their wine is delicious but their regulations are monumental.   Much of the challenge is on the employee, human resources side.  

Employer Challenges
All of us who have had employees know that the complexities of just making payroll are significant.  It is not enough to just make more money than you spend, every employer, big or small must secure professional help to make sure they do not run afoul of employer rules when they pay their employees.

Paychex, symbol PAYX is a stock that meets all Dividend Machine criteria as you will see below.  This is how they describe their business:

We are a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses. As of May 31, 2012, we serviced approximately 567,000 clients, including approximately 2,000 clients through four offices in Germany. We maintain our corporate headquarters in Rochester, New York, and have more than 100 offices nationwide

PAYX Dividend Machine Fundamentals

Paychex closed on Friday July 10, 2015 at $47.48.  I will use the closing price on Monday July 13, 2015 as the basis when I add PAYX to the 2015 Dividend Machine model portfolio.

Paychex has consistently earned more money per share than it pays out in dividends.   As earnings grow so have dividends.   Most recently, PAYX increased the quarterly dividend from $.38 to $.42.  This increase is just about 10%.  Over the past five years, PAYX’s average annual increase is 7.096%.   Using the closing price last Friday, PAYX’s current annualized dividend is $.42 time four or $1.68, for yield of 3.538%.

This is a stock with a solid balance sheet.   They have no debt and have not had any for quite a while.

See the table below to review PAYX’s Dividend Machine fundamentals.

I think being an employer is not getting any easier and this company is well positioned to help small and midsized employers.    Consider PAYX for the income producing portion of your portfolio.


Anticipate adding PAYX soon but no position as of this posting