Broadridge’s rising revenue and earnings give it lots for room to keep increasing its dividend. With its higher share price, the current dividend yields a modest 1.4%.

Until April 2007, the company was a subsidiary of Automatic Data Processing (ADP) . That’s when ADP set it up as a separate company.

Broadridge initially struggled, particularly over fears of big losses at its securities-clearing division during the 2008 credit crisis. However, the stock has rebounded strongly, partly because the company has focused on helping firms communicate with their shareholders, which is less risky than securities clearing. Today, it continues to capitalize on new opportunities to make full use of its existing operations.

BROADRIDGE FINANCIAL SOLUTIONS INC. $135 (New York symbol BR; High-Growth Dividend Payer Portfolio, Finance sector; Shares o/s: 116.3 million; Market cap: $15.7 billion; Dividend yield: 1.4%; Dividend Sustainability Rating: Above Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing.

• Broadridge has increased its dividend each year since it became a public company in 2007
• The stock was added to the S&P 500 Index on June 18, 2018
• Broadridge processes 80% of proxy votes in the U.S.

Investor communications makes up 81% of its overall revenue. Securities processing and transaction clearing account for the remaining 19%.

Broadridge will now raise its quarterly dividend by 32.9%. Starting with the October 2018 payment, investors will receive $0.485 a share instead of $0.365. The new annual rate of $1.94 yields 1.4%.

In the past three years, Broadridge has made 12 acquisitions to expand its product offerings. The biggest of those was its July 2016 purchase of the North American Customer Communications business of DST Systems for $410 million. That unit is the largest transactional printer in North America. Transactional printing refers to the production—and mailing or emailing—of bills, statements, invoices, cheques, insurance policies and other documents with content unique to each recipient.

Broadridge’s overall revenue jumped 69.3%, from $2.56 billion in 2014 to $4.33 billion in 2018 (fiscal years end June 30). Overall earnings rose 62.7%, from $263.0 million to $427.9 million. Due to fewer shares outstanding, per-share earnings improved 67.9%, from $2.12 to $3.56.

In addition to acquisitions, the company continues to benefit from increased mutual fund proxy activity and equity proxy contests. The revenue it generates here leads to higher levels of profitability because any additional business activity makes use of Broadridge’s existing systems.

The company expects recurring fee revenues to grow by 5% to 7% in fiscal 2019. That’s due to its new investments in digital platforms, artificial intelligence, cloud computing and blockchain technology. Broadridge is also doing more work for robo-advisors. Those online, low-fee financial planners provide investors with portfolios of exchange-traded funds (ETFs).

“Our guidance calls for recurring fee revenue growth in the range of 5% to 7% and adjusted EPS growth of 9% to 13%.”

—CEO Rich Daly

As of June 30, 2018, the company held cash of $263.9 million and its long-term debt was $1.05 billion—or just 7% of its market cap.

Due to its aggressive use of acquisitions to expand, the company’s goodwill is $1.25 billion, or 8% of its market cap. However, Broadridge tends to focus on smaller businesses it can easily integrate. That cut the risk of large writedown.

The stock trades at 33.3 times Broadridge’s forecast fiscal 2019 earnings of $4.06 a share. That’s high, but reasonable considering the company’s strong growth prospects and dominant share of its niche industry.

Broadridge is a buy.