Showing posts with label PAYX. Show all posts
Showing posts with label PAYX. Show all posts

Wednesday, September 28, 2016

PAYX beats

Nice result for this 2015 Dividend Machine. M*

Paychex beats by $0.03, beats on revenue $PAYX

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Monday, June 6, 2016

PAYX Covered Call fulfills 2016 stock pick

Update on Paychex, symbol PAYX.  I added Paychex to my 2016 portfolio with confidence that I eventually would be able to sell a call to boost my income.  To remind you, I require a call to generate 8% or more in capital gain should the stock be called away.

Two other metrics I require are:  call premium should be at least 1% or greater of my basis and the expiration date should be out far enough that I get the dividend; provided the stock is not called away earlier than the ex-dividend date.

Today, PAYX fulfilled this final metric.  I sold a September $57.50 for $.70.  See the table below.
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Wednesday, April 27, 2016

PAYX versus ADP

A "Seeking Alpha" follower asked about a comparison of PAYX and ADP.  Two stocks in a similar business.  ADP is a lot bigger than PAYX.

I present to you the comparative analysis using my 2016 criteria in the tables below.  You decide.

M* TheMoneyMadam

Disclosure: Long PAYX
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Tuesday, April 26, 2016

Adding Paychex to 2016 Dividend Portfolio

In 2016 I am looking for a solid stock, one that could withstand a major market disruption.  More than just safety, I need yield and yield growth.  To boost yield I need a stock highly likely to provide covered call income.  Simple stuff right?

This post presents the Dividend stock fundamentals of my most recent 2016 portfolio addition.  I already own this stock and I am up about 10% since July 2015 not including dividends.  With dividends added in I am up 12.3%.  I have not sold any calls on PAYX.

I added PAYX to the 2015 Dividend Machine Model Portfolio in July 2015.   That portfolio is long only.  Whereas in 2016 I will record actual sales as a result of calls being assigned but otherwise, the 2016 portfolio is also long only.

Paychex 2016 Fundamentals

In the table below you will see the data I used to evaluate Paychex.  Earnings are greater than dividends paid $2.04 EPS and $1.68 annual dividend payout.  Dividend yield is 3.2% which is very nice for income investors and dividend growth over the past five years has averaged more than 6% per year.  Even more good news for income investors.   Debt to equity ratio (D/E) is 0.  Paychex has virtually no debt.  So far we have a good dividend stock that would seem to be a safe bet.

Notice a couple of things from that table.  First look at revenue growth.   I am looking for, and believe me it is hard to find, a stock with revenue growth at least 4% year over year (y/y) for the past 3 years.   PAYX has double their revenue growth 8.70%.  Next look at the failure of PAYX to solicit covered calls.  Technically this is a failure but like, WSO, I will wait for some volatility to occur and a covered call to come our way.

Open interest and put/call ratios are a couple of ways to determine if you think a stock will have a future with covered calls available.  Here is a link to a site that writes about call/put activity.  This article written in October 2015 points toward the call opportunities of PAYX.  I am hoping this opportunity will come up again soon.  I see a September $55 call for $.90 but the call expiration date is too far out and the strike price is too low.

In the interim, we have a stock paying not just income, but income that is highly likely to continue to grow while we are paid for yield boosting covered calls and future capital gains.

While I do not technically use other factors to make my decisions to add stocks to my model portfolios, I do like the business.   As all employers know, managing your payroll and making sure you do not run afoul of a myriad of regulatory requirements is a daunting task.  The need for a professional service to manage this part of running a business will grow.  Moreover, Paychex is not a one trick pony.  They also offer retirement and insurance services.

Consider Paychex, PAYX, for the income producing portion of your stock portfolio.

M* TheMoneyMadam

Disclosure:  Long PAYX
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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
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