Paychex Raises Dividend by 6.5%

Despite mixed Q3 results, Paychex . will raise her dividend by 6.5 percent. Paychex . is one of the most important providers of integrated human capital management solutions and human resources, benefits, payroll and insurance services for SME businesses in the US.

Paychex . pays 1 in 12 US private-sector employees and serves over 670,000 payroll clients. 76.2 percent of its revenue is generated from Management Solutions, 22.5 percent from PEO and Insurance Solutions, and the rest of 1.3 percent from Interest on Funds Held for Clients during the quarter ended February 28, 2021.

While most of Paychex . business is in North America, the company also serves clients in Europe. Due to the covid-19 pandemic, Paychex . Q3 results were hit a little bit, as the company reported fiscal 3rd quarter revenue that fell by 2.6 percent (as expected by analyst estimates), as well as non-GAAP earnings of 96 cents, which beat estimates by 4 cents/share.

The FY 2021 forecasts call for -2 percent to flat revenue growth and $2.94 to $3.00 per share earnings, which is pretty much in line with analyst estimates.

The PEO and Insurance Solutions segment also experienced an 8 percent decline due to the covid pandemic, more precisely following a drop in worksite employees at client offices and a rising unemployment rate. Client retention remained strong despite these challenges throughout the quarter, and Paychex .’s strong business model has helped it mitigate the government-imposed restrictions pretty well thus far.

Paychex . raised its quarterly dividend by 6.5% to $0.66 per share, which makes for a 2.6 percent forward yield. The dividend is payable on May 27, 2021, to shareholders on record as of May 12, 2021.