3.1% yield, double-digit dividend growth, 10% upside to $242 fair value.
ADP is a world-class capital-light business with sticky payroll-driven recurring revenue, net cash, and a 3.1% yield with double-digit dividend growth — trading near 5-year lows with potential 10% undervaluation.
ADP's payroll float and near-100% retention create a powerful cash machine. A 30% drawdown has compressed P/E to 20.3 vs. a 5-year average of 29.7, while a $6B buyback (6% of market cap) adds accretion. DDM and Morningstar both point to ~$242 fair value, implying 10% upside.