Paychex, Inc. (NASDAQ:PAYX) Increases Dividend to $1.19 Per Share

Key Points

• Paychex raised its quarterly dividend to $1.19 per share, a 10.2% increase from the previous $1.08 payout. The dividend is payable on May 29 to shareholders of record on May 13, and implies a roughly 5.1% yield.
• The company has raised its dividend for three straight years, though its payout ratio is relatively high at 84.0%. Analysts expect earnings to remain sufficient to cover the dividend, with a projected future payout ratio of 80.5%.
• Paychex also reported solid recent results, with Q3 earnings of $1.71 per share beating estimates and revenue rising 19.9% year over year. The company additionally has a $1 billion share repurchase authorization in place.

Paychex, Inc. (NASDAQ:PAYX - Get Free Report) declared a quarterly dividend on Friday, May 1st. Shareholders of record on Wednesday, May 13th will be given a dividend of 1.19 per share by the business services provider on Friday, May 29th. This represents a c) annualized dividend and a yield of 5.1%. The ex-dividend date of this dividend is Wednesday, May 13th. This is a 10.2% increase from Paychex's previous quarterly dividend of $1.08.

Paychex has increased its dividend by an average of 0.1%per year over the last three years and has raised its dividend every year for the last 3 years. Paychex has a payout ratio of 84.0% meaning its dividend is currently covered by earnings, but may not be in the future if the company's earnings fall. Equities analysts expect Paychex to earn $5.91 per share next year, which means the company should continue to be able to cover its $4.76 annual dividend with an expected future payout ratio of 80.5%.

Paychex Price Performance

PAYX stock opened at $93.93 on Monday. Paychex has a 52 week low of $85.45 and a 52 week high of $161.24. The company has a quick ratio of 1.26, a current ratio of 1.26 and a debt-to-equity ratio of 1.13. The company has a fifty day simple moving average of $92.50 and a two-hundred day simple moving average of $103.62. The firm has a market capitalization of $33.65 billion, a P/E ratio of 20.69 and a beta of 0.84.

Paychex (NASDAQ:PAYX - Get Free Report) last released its quarterly earnings data on Wednesday, March 25th. The business services provider reported $1.71 EPS for the quarter, beating the consensus estimate of $1.67 by $0.04. The business had revenue of $1.81 billion during the quarter, compared to analyst estimates of $1.78 billion. Paychex had a net margin of 25.84% and a return on equity of 48.52%. Paychex's quarterly revenue was up 19.9% compared to the same quarter last year. During the same quarter last year, the business earned $1.49 earnings per share. Analysts anticipate that Paychex will post 5.5 earnings per share for the current fiscal year.

Paychex declared that its Board of Directors has approved a stock repurchase plan on Friday, January 16th that permits the company to buyback $1.00 billion in outstanding shares. This buyback authorization permits the business services provider to purchase up to 2.5% of its stock through open market purchases. Stock buyback plans are generally a sign that the company's management believes its stock is undervalued.

About Paychex

Paychex, Inc, founded in 1971 by B. Thomas "Tom" Golisano and headquartered in Rochester, New York, is a provider of payroll, human resources, and benefits outsourcing solutions for small- and medium-sized businesses. The company's core services include payroll processing and tax filing, employee benefits administration, retirement services, and workers' compensation administration, designed to simplify back-office operations and help clients comply with regulatory and tax requirements.

Paychex offers an integrated technology platform, marketed under the Paychex Flex brand, which delivers cloud-based payroll, HR, time and attendance, and reporting tools.

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