10 Best Dividend Growth Stocks to Buy and Hold in 2025

3. Automatic Data Processing, Inc. (NASDAQ:ADP)

5-Year Annual Dividend Growth Rate: 11.84%

Automatic Data Processing, Inc. (NASDAQ:ADP) is an American management services company that offers payroll processing, tax administration, and human capital management services to its consumers. The company leverages its cloud-based software and solutions to help businesses concentrate on growth while managing the complexities of workforce logistics. Operating in 140 countries, ADP processes payroll for one in every six U.S. workers and 16 million workers globally. This broad client base has established the company as a leader in its field, offering operational efficiency and valuable economic insights derived from its aggregated workforce data. These insights, such as wage benchmarks, provide businesses with competitive intelligence, enhancing the overall value of ADP’s services. In the past year, the stock has surged by over 27%.

In fiscal Q1 2025, Automatic Data Processing, Inc. (NASDAQ:ADP) posted solid earnings, with revenue reaching $4.8 billion, a 7% increase from the previous year. The company’s revenue and margin performance exceeded expectations, fueled by strong growth in new business bookings, high client revenue retention, and a rise in interest revenue from client funds.

In addition to its strong earnings, Automatic Data Processing, Inc. (NASDAQ:ADP)’s cash position has also grabbed investors’ attention. The company ended the quarter with over $2.1 billion available in cash and cash equivalents. Its total assets exceeded $49.5 billion. Its operating cash flow surged to $824.4 million in Q1, up from $326.5 million in the same period last year. In addition, its trailing twelve-month levered free cash flow reached $2.6 billion.

In November this year, Automatic Data Processing, Inc. (NASDAQ:ADP) achieved its Dividend King status, having raised its payout for the 50th consecutive year. Moreover, its 5-year average annual dividend growth rate comes in at 11.84%. The company pays a quarterly dividend of $1.54 per share for a dividend yield of 2.08%, as of December 29.

According to Insider Monkey’s database of Q3 2024, 49 hedge funds were bullish on Automatic Data Processing, Inc. (NASDAQ:ADP), compared with 52 in the previous quarter. The stakes held by these funds are worth over $3.5 billion in total.