This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

4 Stocks Safer Than Treasuries

4. Automatic Data Processing (ADP - Get Report)

Yield: 3%

ADP provides back-office services such as payroll processing, tax and benefits administration, and human-resource services. The company has a great competitive moat; once a client is onboard, switching costs are huge, so client retention rates are upward of 90%.

In the past five years, ADP has grown EPS 12% a year to $2.52 in fiscal 2011 (ended June 30). The balance sheet is also solid. ADP sits on $1.8 billion of cash and has virtually no debt, enabling it to pay out 56% of earnings as dividends. In addition, dividends have improved for 36 consecutive years. The last increase was in November 2010, when ADP raised payments 6% to a $1.44 annual rate, so another hike is likely before year-end. ADP trades at a P/E ratio of 19 and yields 2.9%.

Risks to consider: Exxon's earnings are cyclical, while Johnson & Johnson has been hurt by product recalls. However, all of these stocks have stockpiles of cash, low debt and superior records of dividend growth.

Action to take --> All four of these companies are exceptionally creditworthy, which means they can meet their financial obligations with no trouble. They are also the only four names still standing in Standard & Poor's select list of "AAA" ratings. My top pick is Microsoft because of its consistent high EPS growth and low P/E ratio. But any of these four names are attractive, based on their combination of safety and high yields.

Disclosure: Neither L. Springer nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

Also see:
2 Dividend Stocks for a Global Megatrend
3 Small Stocks with 7%-Plus Dividends
12 Companies that Could Go Bankrupt Very Soon
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
5 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ADP $88.44 -0.74%
JNJ $112.08 -0.36%
MSFT $49.87 -0.06%
XOM $88.40 0.42%
AAPL $93.74 -1.15%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs