Covered on cash flow, thin on earnings. A 4.03% yield is the highest in this batch, and it is real: $1.19 a quarter, raised from $1.08 in May 2026 — about a 10% raise. But the 94.42% trailing earnings payout leaves almost nothing retained, so the dividend depends on earnings holding up; cash-flow coverage near 64% is the cushion, and it is the number to watch.
Key risk: Small-business employment softness — Paychex serves small and mid-sized employers, so hiring freezes or job losses shrink payroll counts and the revenue that funds this payout.
Changes if: The trailing payout stays above 100%, or cash-flow coverage pushes past 80%. Either would leave the $4.76 annual rate with no cushion.
- !Payout-coverage check: 94.42% trailing payout ratio — covered on earnings, but barely; cash-flow coverage near 64% is the real cushion, and it is thinner than a low-payout payer's.
- ✓Yield check: 4.03% indicated — $1.19/qtr × 4 at the $118.04 close on Oct. 23, 2026. Real, earned yield, not a special or a return of capital.
- ✓Dividend growth check: Raised again in May 2026, from $1.08 to $1.19 a quarter — about a 10% raise.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.