ADP: One of the Fastest-Growing Dividend Aristocrats

Automatic Data Processing (ADP) was founded in 1949 and is one of the largest providers of human capital management (HCM) solutions in the world. ADP offers a wide range of cloud-based software solutions and services, which companies use to pay, recruit, staff, manage, and retain employees.Over 40 million people around the globe depend on ADP for accurate pay, reliable benefits administration, effective performance management, or other human resource services.The company generates most of its revenue on a recurring basis from providing payroll services (handles the preparation of employee paychecks, pay statements, journals, and summaries), including paying 1 out of every 6 workers in the U.S., but has expanded its suite of products over the last decade to cover most of [...]

April 19th, 2019|

Reviewing Blackstone’s Corporate Conversion and Dividend Policy

Blackstone (BX) announced it will convert from a publicly traded partnership to a corporation on July 1, 2019. Investors cheered the move, sending shares of BX higher by 7.5%. Let's review Blackstone's rationale for the change and what it could mean for income investors. Blackstone decided to convert from a partnership to a corporation due to tax reform, which reduced the highest corporate tax rate from 35% to 21%. While Blackstone's tax bill will increase due to this change (partnerships pass on their income tax obligations to their owners, but corporations pay income tax), management believes that incremental cost will be more than offset by the benefits of a simpler structure.

April 18th, 2019|

Qualcomm Settles with Apple, Improving Dividend Safety Outlook

Qualcomm (QCOM) shareholders received good news yesterday: the chip maker and Apple agreed to drop all litigation, sending Qualcomm's stock surging more than 20%. In February 2019 we outlined the significant legal risks Qualcomm's core licensing business faced. I recommend skimming our note for more background on the situation, but essentially Qualcomm was accused by Apple and others of abusing its monopolistic position in wireless chips and charging excessive royalty rates. As we noted, the stakes were high.

April 17th, 2019|

Reviewing Chevron’s Dividend Safety Following $33 Billion Acquisition

Chevron (CVX) shares fell 5% on Friday after management announced a $33 billion deal to buy Anadarko Petroleum (APC).  As a result of this cash-and-stock acquisition, Chevron's debt load will increase and its payout ratio will rise. Let's take a closer look at why the company wants to buy Anadarko and how the transaction affects Chevron's dividend safety profile. 

April 15th, 2019|
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