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Paychex: A Business Every Dividend Growth Investor Should Know

Published Sat, 09 Feb 2019 13:43:06 -0500 on Seeking Alpha

There are certain traits that make a company a strong dividend growth stock, and ultimately a productive long-term investment. We look at profitability, growth, structure of the business model, and other factors to hone in on companies that build wealth for investors over the long term. When we look at Paychex Inc. (PAYX), we see a lot of positive traits that indicate potential for consistent, wealth generating returns over the long term. We review this business model and identify where the company excels as a dividend growth stock. While the foundation for success is present, investors should note that there are near-term headwinds that the company could face. While now may not be the time to buy shares, every dividend growth investor should know who Paychex is.

Paychex provides payroll and human resource services to a variety of businesses. The company caters to small and medium sized businesses that may lack the resources to create their own solutions to fit these needs. The company was founded in 1971, and is based in Rochester, NY. The company operates as two segments: Management Services, and PEO (Professional Employer Organization) & Insurance Services. Management Services contributes the vast majority of revenues, primarily driven by the company's payroll management business. The total company brings in more than $3.4 billion in annual revenue.
Financial Performance
Source: Ycharts
Paychex has seen very steady but modest growth over the past... Read more