Automatic Data Processing, Inc. provides technology-based outsourcing solutions to employers, vehicle retailers, and manufacturers. It operates in three segments: Employer Services, Professional Employer Organization Services, and Dealer Services. This dividend aristocrat has raised dividends for 34 consecutive years. Back in November 2008 Automatic Data Processing announced a 13% dividend increase.

Over the past decade this dividend growth stock has delivered an average total return of 0.50% annually. In 2007 ADP spun off its Brokerage Services business, distributing one share of Broadridge Financial (BR) common stock for every four shares of ADP common stock held by shareholders. The total returns calculation for ADP over the past decade includes this transaction.

The company has managed to deliver an 8.00% average annual increase in its EPS between 1999 and 2008. Analysts expect Automatic Data Processing to earn $2.38 share in FY 2009, followed by a small decline to $2.36/share in FY 2010. ADP's earnings have been constrained by decrease in overall employment levels, closings at small and midsize businesses it services and a general decrease in interest income from funds held for clients. Never the less the company could achieve strong revenue growth of 5%-6% annually, as its markets such as HR management services and Business Process Outsourcing are expected to grow annually in the 5%-6% range over the next five years. The company is a leader in the processing space, and could achieve growth through acquisitions and expansion abroad. There is a high barrier to entry in order to compete in ADP's business segments. I like the recurring revenue and long term deals structure that ADP's business enjoys.