June 26, 2025 a 02:46 am
PAYX: Dividend Analysis - Paychex, Inc.
Paychex, Inc. demonstrates strong fundamentals with a steady dividend growth history. The company's robust balance sheet and strategic capital management contribute to its resilience in the market. Investors might find its stable dividend yield and history of consistent payouts attractive, though the relatively high payout ratio warrants monitoring. Overall, Paychex, Inc. remains a reliable choice for dividend-focused portfolios.
Overview 📊
Paychex, Inc. operates within the business services sector, offering a comprehensive dividend profile characterized by a well-maintained payout history.
| Category | Details |
|---|---|
| Sector | Business Services |
| Dividend Yield | 2.65% |
| Current Dividend per Share | $3.65 |
| Dividend History | 38 years |
| Last Cut or Suspension | None |
Dividend History 📜
With an extensive 38-year history of dividend distributions, Paychex, Inc. showcases commitment to providing consistent shareholder returns. This track record of uninterrupted payments signals financial stability and a reliable income stream for investors.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 2.06 |
| 2024 | 3.83 |
| 2023 | 3.46 |
| 2022 | 3.03 |
| 2021 | 2.60 |
Dividend Growth 📈
The progressive growth of dividends over time emphasizes Paychex, Inc.'s dedication to enhancing shareholder value. Steady growth rates over 3 and 5 years exemplify the company's strategic financial planning.
| Time | Growth |
|---|---|
| 3 years | 13.78% |
| 5 years | 9.62% |
The average dividend growth is 9.62% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio 👛
Payout ratios reflecting earnings and free cash flow offer insights into the sustainability of dividend payments. Paychex, Inc.'s payout strategy balances rewarding shareholders with maintaining financial health.
| Key Figure Ratio | Percentage |
|---|---|
| EPS-based | 75.55% |
| Free Cash Flow-based | 82.08% |
The EPS payout ratio at 75.55% and the FCF payout ratio at 82.08% suggest a substantial portion of earnings and cash flows are distributed to shareholders, highlighting the importance of continued earnings growth to sustain these payments.
Cashflow & Capital Efficiency 💲
Cash flow metrics provide a lens into the operational efficiency and capital management strength of Paychex, Inc.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.01% | 4.12% | 3.07% |
| Earnings Yield | 3.90% | 4.12% | 3.12% |
| CAPEX to Operating Cash Flow | 8.51% | 8.41% | 8.81% |
| Stock-based Compensation to Revenue | 1.16% | 1.25% | 1.14% |
| Free Cash Flow / Operating Cash Flow Ratio | 91.49% | 91.59% | 91.19% |
Stable cash flows and prudent capital investment ratios underline Paychex, Inc.'s effective capital management ensuring liquidity and investment capacity.
Balance Sheet & Leverage Analysis 📊
Analyzing key ratios provides insight into leverage and financial flexibility.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 23.30% | 24.78% | 28.56% |
| Debt-to-Assets | 8.53% | 8.21% | 9.15% |
| Debt-to-Capital | 18.89% | 19.86% | 22.22% |
| Net Debt to EBITDA | -0.24 | -0.16 | 0.25 |
| Current Ratio | 1.37 | 1.30 | 1.25 |
| Quick Ratio | 1.37 | 1.30 | 1.25 |
With low levels of leverage and robust liquidity ratios, Paychex, Inc. maintains substantial financial flexibility and low financial risk.
Fundamental Strength & Profitability 📉
Assessing profitability and efficiency metrics is crucial to evaluate the core financial strength of Paychex, Inc.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 44.47% | 44.58% | 45.14% |
| Return on Assets | 16.28% | 14.77% | 14.46% |
| Return on Invested Capital | 32.54% | 32.40% | 31.92% |
| Net Profit Margin | 32.03% | 31.10% | 30.20% |
| EBIT Margin | 42.73% | 40.60% | 39.90% |
| R&D to Revenue | 0.00% | 0.00% | 0.00% |
The robust return metrics and profitability ratios highlight Paychex, Inc.'s operational excellence and efficiency in resource utilization.
Price Development 🗣️
Dividend Scoring System ✅
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 3 | |
| Financial Stability | 5 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 5 | |
| Balance Sheet Quality | 4 |
Total Score: 35/40
Rating & Recommendation 🏆
Paychex, Inc. offers a compelling investment profile for those focused on dividends with a mix of robust growth and stability indicators. Its strong dividend history, coupled with consistent growth and solid financial underpinnings, positions this company as a potential stronghold in dividend-focused investment strategies.