Dividend Channel Identifies Oversold Conditions For Top Quartile Ranked Dividend Stock ADP

By DividendChannel.com

The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics â¿¿ strong fundamentals and a valuation that looks inexpensive. Automatic Data Processing Inc. (NASD: ADP) presently has an excellent rank, in the top 25% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.

But making Automatic Data Processing Inc. an even more interesting and timely stock to look at, is the fact that in trading on Friday, shares of ADP entered into oversold territory, changing hands as low as $52.13 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

Click here to find out what 9 other oversold dividend stocks you need to know about, at DividendChannel.com »

In the case of Automatic Data Processing Inc., the RSI reading has hit 29.8 â¿¿ by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 37.8. A falling stock price â¿¿ all else being equal â¿¿ creates a better opportunity for dividend investors to capture a higher yield. Indeed, ADP's recent annualized dividend of 1.58/share (currently paid in quarterly installments) works out to an annual yield of 3.01% based upon the recent $52.52 share price.

A bullish investor could look at ADP's 29.8 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on ADP is its dividend history.

In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.

ADP Dividend History

Date
Div*

03/07/12
0.395

12/07/11
0.395

09/07/11
0.360

06/08/11
0.360

03/09/11
0.360

12/08/10
0.360

09/08/10
0.340

06/09/10
0.340

03/10/10
0.340

12/09/09
0.340

09/09/09
0.330

06/10/09
0.330

03/11/09
0.330

12/10/08
0.330

09/10/08
0.290

06/11/08
0.290

03/12/08
0.290

12/12/07
0.290

09/12/07
0.230

06/13/07
0.230

04/02/07
4.925

03/07/07
0.230

12/06/06
0.230

09/13/06
0.185

06/07/06
0.185

03/08/06
0.185

12/07/05
0.185

09/07/05
0.155

06/08/05
0.155

03/10/05
0.155

12/08/04
0.155

09/08/04
0.140

06/09/04
0.140

03/11/04
0.140

12/10/03
0.140

09/10/03
0.120

06/11/03
0.120

03/12/03
0.120

12/11/02
0.120

09/11/02
0.115

06/12/02
0.115

03/13/02
0.115

12/12/01
0.115

06/06/01
0.103

03/07/01
0.103

12/07/00
0.103

09/13/00
0.088

06/07/00
0.088

03/08/00
0.088

12/08/99
0.088

09/08/99
0.076

06/09/99
0.075

03/10/99
0.075

12/09/98
0.152

09/09/98
0.132

06/10/98
0.132

03/11/98
0.132

12/10/97
0.132

09/10/97
0.115

06/11/97
0.077

03/12/97
0.077

12/11/96
0.077

09/11/96
0.067

06/12/96
0.067

03/13/96
0.067

12/13/95
0.133

09/13/95
0.117

* Data may be adjusted for splits; we are not responsible for data errors; always verify data with the company.

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ADP makes up 2.38% of the Morningstar StockInvestor Core Portfolio ETF (AMEX: PYH)

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