PAYCHEX INC - Dividend & Growth - Long Term / Swing Trade

Updated: May 23

Hello fellow investors and traders!


Today we are presenting you a share with substantial price potential and attractive dividends!


We take a closer look at Paychex Inc, a company that has made it its business to digitize and outsource all HR matters in small and medium sized companies.

While many investors look to top companies like Apple, Google and Facebook for innovation, dominance and profits, it is easy to forget that small and medium sized companies are the backbone of the American economy. This is true not only for North America, but also for the markets in Europe and, frankly, for the whole world.


Paychex Inc takes advantage of that.


A well-functioning human resources department is essential for every company, regardless of its business model and industry. The ability to offer HR, payroll and benefit outsourcing services to such a broad audience leaves plenty of room for growth and value creation on a large scale.


Paychex Inc offers an attractive dividend yield of 3.5% and a robust cash flow. A look at the balance sheet reveals a steadily increasing EBITDA and growing net assets.

Despite COVID-19, they communicate that they "have sufficient cash to support normal operations, share buybacks and dividends" (Source).


A glance at the chart shows a consistent channel, confirmed several times over the last 8 years, which shows a range of ~30% across a base value. As with all companies recently, this channel was interrupted by COVID-19, but a strong resistance at around $60-62 provides an anchor that is unlikely to be breached again.

We believe that we are now in both a short-term uptrend due to the recent rebound from this resistance level and a long-term uptrend driven by fundamentals. This is an excellent starting point for a long-term investment or swing trade, with upside potential of ~30% in the coming year.


I hope you enjoyed our analysis.

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Happy trading and investing,

your DipDetector Team




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