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3 Dividend-Paying Stocks to Watch Out For Amid COVID-19 Woes

The U.S. economy recorded massive 33.1% growth in the third quarter of 2020 as against a huge downfall of 31.4% in the second quarter of 2020. The uptick can be attributed to the gradual resumption of business activities, which were postponed or restricted due to coronavirus-induced strict lockdowns across the globe.

With business operations coming to a standstill, millions lost their jobs while several others filed for unemployment benefits to survive the economic hardships. To tackle the liquidity crisis, companies opted for multiple cost-cutting measures such as furloughs, layoffs and reduction in discretionary expenses. The most widely followed step to maintain liquidity during recessionary conditions is dividend cut or suspension of dividend payment until the overall situation improves.

Several firms across diverse sectors chose to follow the trend but there were a few exceptions

3 Companies That Rewarded Shareholders

CRA International, Inc. CRAI: This Massachusetts-based consulting company, provides economic, financial, and management consulting services in the United States, the United Kingdom, and internationally.

This Zacks Rank #2 (Buy) company has increased its quarterly dividend rate by 13%, from 23 cents per share to 26 cents per share. The increased dividend will be paid out on Dec 11, 2020 to shareholders of record at the close of business on Nov 24. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Despite coronavirus-induced adversities, Charles River Associates’ top line has been doing well on the back of strength across services and geographies. The company witnessed double-digit growth in each of its Energy, Finance, Forensic Services, and Risk, Investigations & Analytics practices and across its legal & regulatory and management consulting lines of business. Geographically, growth was witnessed across North American and international operations.

The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 17.1% in the past 90 days. The company’s expected earnings growth rate for the year is 6.9%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 13%. The company has a trailing four-quarter earnings surprise of 29.7%, on average. The stock has rallied 29.2% in the past six months.

Charles River Associates Price, Consensus and EPS Surprise

Charles River Associates price-consensus-eps-surprise-chart | Charles River Associates Quote

Automatic Data Processing, Inc. ADP: This New Jersey-based Zacks Rank #2 company provides cloud-based human capital management solutions worldwide.

The company recently announced a dividend hike of 2.2%, thereby raising its quarterly cash dividend to 93 cents per share from 91 cents. This reflects its 46th consecutive year of increased cash dividend. The raised dividend will be paid out on Jan 1, 2021 to shareholders of record on Dec 11, 2020.

Automatic Data Processing continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. The company has lower risk of insolvency. Further, the company continues to innovate, improve operations and invest in its ongoing transformation efforts. Effective cost containment measures have helped the company improve its margin performance. The company is also witnessing new business bookings and client retention in these challenging times.

The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 11.9% in the past 90 days. It has a long-term (three to five years) expected earnings growth rate of 12%. The company has a trailing four-quarter earnings surprise of 17.2%, on average. The stock has rallied 11.4% in the past six months.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Waste Connections, Inc. WCN: This Canada-based Zacks Rank #3 (Hold) company provides waste collection, transfer, disposal, and recycling services in the United States and Canada.

The company has hiked its quarterly dividend by 10.8%, from 18.5 cents per share to 20.5 cents per share. This reflects its 10th consecutive double-digit percentage increase since the initiation of dividend payment in 2010.

Sequential improvement in solid waste volumes and increased recovered commodity values has been aiding the company’s top line. The company's focus on secondary and rural markets to garner a higher local market share is appreciable. The company has optimal asset positioning to generate higher profitability. Acquisitions have been helping in expanding global presence and strengthen its product portfolio.

The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 4.9% in the past 90 days. It has a long-term (three to five years) expected earnings growth rate of 9.13%. The company has a trailing four-quarter earnings surprise of 8.2%, on average. The stock has rallied 7.7% in the past six months.

Waste Connections, Inc. Price, Consensus and EPS Surprise

Waste Connections, Inc. price-consensus-eps-surprise-chart | Waste Connections, Inc. Quote

The chart below shows the price performance of the aforementioned stocks compared with the broader Zacks Business Services sector in the past six months.

 

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Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report
 
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Waste Connections, Inc. (WCN): Free Stock Analysis Report
 
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