Paychex

Methodology

Paychex's payroll processing and HR outsourcing generate highly predictable recurring revenue from small and medium business clients. Client retention and float income from payroll funds provide earnings visibility. The stable business model with recurring revenue makes earnings projections straightforward and reliable for this SMB-focused payroll provider.

Methodology

Paychex typically trades at premium PEG ratios reflecting recession-resistant recurring revenue, high margins, and steady client growth in SMB payroll services. While growth appears modest, business quality and consistency justify valuations above typical service companies. Compare to ADP and historical ranges rather than high-growth software companies.

Methodology

Paychex offers a substantial dividend with consistent growth supported by stable cash generation from recurring payroll processing fees. The dividend provides meaningful income alongside modest growth. PEGY better captures total return expectations for investors seeking both reliability and income from this defensive service provider.