maz

Automatic Data Processing: Better Suited to Survive This Downturn than Its Competitors

Paychex is the better opportunity. You are correct on the dividend payout ratio but you pay dividends from cash not earnings - the cash payout ratio is still high but at 70% is better than the earnings payout ratio.

A big key for Paychex & ADP is the inflation/deflation debate. Right now they are both earning very little off customer float and their own cash because interest rates are so low & a deliberate policy to preserve capital & maintain liquidity. Paychex interest income is less than half long term average on $4 billion cash (float + own cash). If you believe we're in for Japan like deflation this will continue for many years. If you believe that at some time - may be 2, 3 or 4 years - inflation will really take hold then these guys will get a big boost