Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, payroll processor Automatic Data Processing (Nasdaq: ADP) has earned a respected four-star ranking.

With that in mind, let's take a closer look at ADP's business and see what CAPS investors are saying about the stock right now.

ADP facts

Headquarters (Founded)

Roseland, N.J. (1949)

Market Cap

$20.9 billion


Data processing and outsourced services

Trailing-12-Month Revenue

$8.9 billion


CEO Gary Butler

CFO Christopher Reidy

Return on Equity (Average, Past 3 Years)



$1.67 billion / $40 million

Dividend Yield



Paychex (Nasdaq: PAYX)

Administaff (NYSE: ASF)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 94% of the 933 members who have rated ADP believe the stock will outperform the S&P 500 going forward. These bulls include fooch44 and the top-ranked member in all of CAPS, bullishbabo.

A couple of months ago , fooch44 tapped ADP as a solid income opportunity:

With sticky customers, increasing business offerings and generating a good portion of income from the "free money float" on its investment portfolio, this company is a great long term pick. ... [H]igh unemployment and low interest rates are obvious headwinds. However, ADP has great financials and its commitment to dividend yield growth sends strong signals of success.

In fact, ADP has increased its dividend payout for an amazing 35 consecutive years. Driving that streak, of course, is a truly dominant position in the payroll processing space, marked by huge scale advantages and high customer switching costs. While rivals Paychex and Administaff have more room for margin expansion due to their focus on small to mid-sized businesses, ADP's massive base of larger clients tends to be more stable. With average client retention of 10 years and a long history of free cash flow generation, Fools don't seem particularly worried about the short-term unemployment headwinds working against ADP.

CAPS leader bullishbabo explains:

Total net income doesn't seem to be increasing very fast, but part of ADP's plan seems to be to massively buy back shares. EPS has grown nicely in recent years almost solely due to share buybacks. Since the share price isn't very volatile, I expect the share buyback prices to be reasonable. It's an interesting way to deliver consistent shareholder return as long as the share price isn't frothy. In other news, ADP has a long history of dividend increases and still sports a conservative payout ratio. Collect the dividend and a reasonable rate of increases on EPS.

What do you think about ADP, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. ADP and Paychex are Motley Fool Income Investor picks. Paychex is also an Inside Value choice, as is Administaff. The Fool's disclosure policy always gets a perfect score.