Known for its cloud-based human capital management (HCM) solutions, Automatic Data Processing (ADP -0.05%) is a top leader in human resources management and software for companies around the globe. ADP serves over 1.1 million clients around the world, and its solutions are used in more than 140 different countries and territories to pay more than 42 million workers.
The story of this payroll and human resources giant goes back to 1949, when the company was founded by Henry and Joe Taub as Automatic Payrolls, Inc. At the time, the business was a manual payroll processing business, but the company began to automate with the influx of new technology that occurred in the mid-20th century. By the early 1960s, the company was doing business under the name Automatic Data Processing, leveraging the power of computers and punch card machines to complete work for its clients.
ADP has been a publicly traded company since 1961. By the mid-1980s, roughly 40 years into its history as a company, ADP passed the $1 billion annual revenue mark and was processing paychecks for approximately one-fifth of the workforce in the U.S. ADP has grown through external acquisitions, as well. Through the years, it's acquired an administration services provider, a payroll management services company, a digital payments brand, and a freelance talent management platform, among others.
In this deep dive into investing in ADP, we'll explore how to buy ADP stock, whether it could be a good use of your investment dollars, if the company is profitable, whether it pays a dividend, and so much more.
Stock
How to invest
How to buy ADP stock
Because ADP is a publicly traded company, you can buy shares as easily as you would any other U.S.-listed stock. If you're interested in snagging a few shares of the company, here's your step-by-step guide for how to buy ADP stock.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest?
Should I invest in ADP stock?
Whether or not you should invest in ADP stock will depend on your investing style. This is traditionally a value-oriented business that is also a nice stock play for income-seeking investors, so if you gravitate toward value and/or dividend investing, this company could be an excellent addition to your portfolio. On the other hand, if you tend to gravitate toward high-growth stocks, you might decide you want to look elsewhere.
Still, there are a lot of things to like about ADP stock. The company is a leader in the payroll and workforce management market. Many of ADP's clients rely on the business to handle most or all of their human resources needs, and outsourcing these tasks allows those companies to focus instead on their core operations. ADP remains accessible to its clients at all times through mediums ranging from call and chat options to an artificial intelligence-powered communication solution.
ADP is rapidly integrating artificial intelligence (AI) into its various software offerings and launched a new product called ADP Assist in 2024. ADP Assist is a generative AI tool that provides conversational solutions to many of the most common human resources needs, including payroll, recruitment, analytics, and compliance. For example, ADP Assist can be used by clients to verify payroll information, check for issues, and simplify report creation for human resources professionals.
The company divides its business operations and revenue sources into two reportable segments: employer services and professional employer organization (PEO). Its employer services segment helps everyone, from small businesses and solo practitioners to large multinational companies, to manage their employees, processes, and tools. These solutions include cloud-based offerings and other services that support tasks such as payroll services, administering benefits, talent management, compliance services, and insurance services.
The PEO allows companies to take advantage of full-service outsourcing of various employment administration tasks, which can range from handling payroll to administering benefits. ADP's PEO business provides comprehensive outsourcing services through employment administration professionals who are co-employed by ADP and the client, which could be a small, mid-sized, or large business.
ADP operates in a large and growing total addressable market in which it remains a dominant force in most of the subsectors it serves. The global human capital management market was valued in the ballpark of $29 billion as of 2023, and is expected to jump to more than $63 billion by the early 2030s. Its balance sheet is in solid shape, and its businesses are growing at a favorable rate for a business of this scale and maturity.
In addition, ADP benefits from an asset-light business model and enjoys well-diversified sources of business growth that flow to the bottom line based on the wide swath of human capital management services it provides. These services are essential for everyone, from mom-and-pop shops to massive enterprises.
Profitability
Is ADP stock profitable?
ADP stock is profitable. In the company's fiscal 2025 third quarter, earnings increased 5% to $1.2 billion.
Dividends
Does ADP stock pay a dividend?
ADP stock does pay a dividend and has an incredibly impressive history of not only maintaining but also raising that payout. It has increased its dividend for 50 consecutive years, making it a Dividend King.
Exchange-Traded Fund (ETF)
Pros and cons
Pros and cons of investing in ADP stock
Depending on your investing style and the goals you have for your overall portfolio, there could be numerous potential advantages to investing in ADP stock.
- ADP is a major player in its industry, with a stable and mature business model.
- Payroll and HR services are critical for businesses, creating a consistent demand for ADP's offerings, regardless of the economic climate.
- ADP has a strong record of paying and growing its dividends, which could make it attractive for income-seeking investors.
- The company is actively integrating AI into its platforms and expanding its cloud-based solutions, which could position it to remain competitive and potentially capture new market share.
There are some cons you might want to consider, too.
- ADP may not offer the explosive gain potential sought by some growth-oriented investors.
- The HR and payroll software market is competitive, which could potentially lead to pricing pressures and require ongoing investment in new features to maintain market share.
- A significant economic downturn could affect employment levels and potentially reduce the growth rate for ADP's services.
ETFs
ETFs with exposure to ADP stock
There are many exchange-traded funds (ETFs) that provide exposure to ADP stock. An ETF can be a great way to get exposure to stocks you're interested in without holding shares of the individual stocks, providing instant diversification as you expand your portfolio holdings.
Some ETFs to consider if you decide you'd like to invest in shares of ADP stock, along with many other stocks, include SPDR S&P 500 ETF Trust (NYSEARCA:SPY), iShares Core S&P 500 ETF (NYSEARCA:IVV), and Invesco ETF Tr-Invesco QQQ Tr, Series 1 ETF (QQQ -1.29%).
Stock splits
Will ADP stock split?
ADP stock has split multiple times throughout the company's history:
- May 22, 1981 (2-for-1)
- June 9, 1986 (2-for-1)
- May 1, 1991 (2-for-1)
- January 2, 1996 (2-for-1)
- January 4, 1999 (2-for-1)
- April 2, 2007 (10,000-for-9,033)
- October 1, 2014 (1,139-for-1,000)
Related investing topics
The bottom line on ADP stock
ADP has a lot of favorable qualities as a stock. It's a leader in human capital management solutions, and benefits from a market-leading business that has survived economic highs and lows while continuing to grow revenue as well as profits. The company's impressive track record as an income stock and enviable payout ratio also make it a good stock for investors searching for extra cash to reinvest or save.
As private sector job growth expands and economic conditions continue to improve after a difficult few years, ADP's flagship businesses are well poised to benefit. This value stock could be a solid addition to a long-term investor's portfolio.
FAQ
Investing in ADP stock FAQ
Is ADP a good stock to own?
ADP is a profitable business with leadership in multiple niches of the human capital management industry, which could make it a smart pick for long-term investors.
Does ADP stock pay dividends?
ADP pays dividends and increases its payout regularly. It has boosted its payout every year for 50 consecutive years.
How do you buy ADP stock?
You can buy ADP stock on any brokerage platform of your choice.
Is ADP publicly traded?
ADP is a publicly traded stock.
Who owns the most ADP stock?
The Vanguard Group owns the most shares of ADP stock, controlling more than 10% of shares outstanding.
Is ADP a good long-term investment?
ADP could be a good long-term investment for some individuals due to its robust underlying financial health, consistent growth, and solid dividend history.
