How to Invest in ADP Stock (ADP)

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.

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.

Is ADP stock profitable?

ADP stock is profitable. In the company's fiscal 2025 third quarter, earnings increased 5% to $1.2 billion.

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.

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 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 -0.96%).

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)

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