Dividend Kings In Focus: ABM Industries

Up to date on July eleventh, 2026 by Josh Arnold

ABM Industries (ABM) has a unbelievable observe document of paying dividends to shareholders. The corporate is a part of the Dividend Kings, a gaggle of shares which have raised their payouts for not less than 50 consecutive years. You’ll be able to see all 58 Dividend Kings right here.

We compiled a complete listing of all 58 Dividend Kings, together with key monetary metrics reminiscent of dividend yields, payout ratios, and price-to-earnings ratios. You’ll be able to obtain the total listing by clicking on the hyperlink beneath:

Dividend Kings have the longest observe document on the subject of rewarding shareholders with money returns. This text will talk about ABM’s dividend security, valuation, and outlook.

Enterprise Overview

ABM was based in 1909 and has grown into an trade powerhouse. ABM Industries is a number one supplier of facility options, together with janitorial, electrical and lighting, power options, services engineering, HVAC and mechanical companies, panorama and turf administration, and parking companies. The corporate produces $9.2 billion in annual income and has a market cap of about $2.6 billion.

ABM has a protracted and spectacular shopper listing that features hospitals, universities, public faculties, information facilities, manufacturing vegetation, and airports. The corporate’s experience and plenty of a long time of expertise in facility administration have earned it a terrific status, making it a real trade chief.

ABM’s technique is to compete in industries the place it could possibly win quite than competing all over the place. Over the a long time, ABM has discovered the place it could possibly compete efficiently and the place it can not and has targeted its efforts accordingly.

In 2007, ABM’s annual income was roughly $3 billion; nevertheless, it has greater than tripled since then, at present standing at greater than $9 billion. ABM has grown organically to some extent, however the overwhelming majority of its development has been achieved by way of acquisitions. Given ABM’s strategic route concerning future money utilization, we are able to anticipate extra acquisitions within the years to return.

ABM additionally has an distinctive dividend development document. The corporate has paid greater than 240 quarterly dividends and elevated its dividend for 58 consecutive years.

Supply: Investor Presentation

Given the remarkably low payout ratio of ~29% projected for 2026, its long-term development prospects, and its resilience to recessions, ABM is prone to hold elevating its dividend for a few years to return. Moreover, the corporate has repurchased shares in current quarters, which has helped drive increased earnings per share. This represents a departure from prior conduct, the place capital returns had been virtually solely generated by way of money dividends. Administration has determined the inventory is affordable, and is successfully deploying extra money to maintain a ground below the share value.

One supply of potential earnings development going ahead is worldwide enlargement, as ABM has entered the U.Ok. market by way of the GBM and Westway acquisitions over the previous few years. Going ahead, proceed to search for quite a few transactions from ABM by way of acquisitions and divestitures because it additional shifts its combine. We word acquisitions aren’t fixed, so it could be a while between purchases for ABM.

ABM is break up into six segments that present its prospects a big selection of facility options: Enterprise & Trade, Schooling, Aviation, Expertise & Manufacturing, Healthcare, and Technical Options. The corporate’s income streams are extremely diversified, with janitorial companies comprising ABM’s most vital single income stream.

Progress Prospects

As we noticed above, ABM’s said technique is to develop by acquisition. Nevertheless, that’s to not say it ignores its capacity to develop organically. When it has free money move to spend, it prioritizes natural development. The corporate has deep experience and a very good status within the US for services administration, and it appears to leverage that wherever doable. Which means concentrating on nationwide accounts first, the place it could possibly safe a major quantity of enterprise suddenly, in addition to centralizing assist companies to enhance margins.

ABM additionally explicitly calls out acquisitions in its technique, though it prioritizes natural investments and dividends. Nonetheless, ABM’s current historical past means that acquisitions are an important a part of its general technique, and thus, we are able to anticipate ABM to proceed rising each by way of acquisitions and organically.

ABM continues to be extraordinarily targeted on the US market, which presents potential alternatives for additional worldwide enlargement. ABM might use its vital experience in services administration to realize entry to international shoppers. The strikes into the U.Ok. lately show ABM is keen to take an opportunity; this can be probably the most vital development avenue ABM has going ahead.

Supply: Investor Presentation

ABM reported fiscal Q2 2026 earnings on June fifth, 2026, and outcomes had been fairly good as soon as once more. Income was $2.3 billion, up 10% year-over-year, and beating estimates by a really strong $90 million. Progress picked up sequentially as properly, rising from a 6% development fee within the prior quarter. Nevertheless, EBITDA revenue margin fell barely year-over-year to five.7% of income.

Earnings got here to 90 cents per-share, which was additionally forward of estimates. The corporate left its steering unchanged for the fiscal 12 months.

Supply: Investor Presentation

With steering nonetheless at $3.85 to $4.15 in adjusted earnings-per-share for this 12 months, we’ve left our estimate at $4, the midpoint of administration’s steering. We word administration guided for the excessive finish of income development, however the low finish of revenue margins. These components ought to roughly offset one another, with earnings in the end settling close to the center of the steering vary.

Aggressive Benefits & Recession Efficiency

ABM’s aggressive benefit lies in its dimension and the ensuing economies of scale it enjoys. It has a 100+ 12 months historical past of offering facility options for a big selection of shoppers, and that experience is what units ABM aside. It’s a true trade chief within the services administration area, and that affords it not solely the power to draw new shoppers extra simply but additionally to increase relationships with those it already has.

As well as, since ABM operates in low-margin companies, smaller opponents are at a drawback by way of leveraging back-office and assist prices. ABM could also be in some aggressive traces of labor, however it’s definitely higher positioned than its opponents to beat these obstacles.

ABM Industries is among the largest corporations in its trade, and its historical past of constructing acquisitions has additional enhanced its scale benefits. ABM Industries is prone to proceed making acquisitions to increase its dimension additional.

Recessions are painful for ABM similar to another firm, however its efficiency throughout the Nice Recession was exceptional. ABM’s earnings-per-share throughout the Nice Recession are beneath:

2007 earnings-per-share of $0.99
2008 earnings-per-share of $1.10 (11% improve)
2009 earnings-per-share of $1.33 (21% improve)
2010 earnings-per-share of $1.34 (0.7% improve)

Notably, ABM grew earnings per share annually throughout the Nice Recession. Only a few corporations had been in a position to accomplish this. Furthermore, ABM as soon as once more proved its resilience within the coronavirus pandemic. It’s really a defensive, recession-resistant inventory for that reason.

Because of a rise in high-margin work orders from resilient prospects, ABM has simply offset the pandemic’s affect on its prospects within the aviation trade and training. Because of this, it’s poised to develop its earnings per share to an all-time excessive degree this 12 months as soon as once more, and by a large margin over 2025.

Total, ABM enjoys skinny working margins and lackluster development charges throughout regular financial occasions however is exceptionally resilient throughout tough financial durations.

This resilience is essential, because it helps the inventory’s long-term returns and makes it simpler for shareholders to retain the inventory throughout broad market sell-offs.

Valuation & Anticipated Returns

ABM is predicted to generate earnings per share of $4 in its fiscal 2026. Because of this, the inventory is at present buying and selling at a price-to-earnings ratio of simply 11.2. That is considerably decrease than the common price-to-earnings ratio of ~15.5 for the inventory previously 10 years. Nevertheless, we think about 12 occasions earnings to be an affordable estimate of truthful worth for this inventory given lumpy development in earnings lately.

The inventory is sort of as low cost because it has been at any level previously decade. If the inventory trades at our assumed truthful valuation degree in 5 years, because of the enlargement of its earnings a number of, it can generate a a fractional tailwind to whole returns.

Furthermore, the inventory affords a 2.6% dividend yield. This yield is about double that of the S&P 500’s, so ABM is a strong revenue inventory as properly.

As well as, current dividend raises have been very small, with typical will increase within the 2% or 3% vary. Whereas ABM has a powerful historical past of paying dividends, it lacks a excessive present yield and dividend development fee.

Lastly, we anticipate annual EPS development of 6.0% over the subsequent 5 years. Mixed with a 2.6% dividend and a really small annualized enlargement of the price-to-earnings ratio, whole annual returns might strategy 10% per 12 months.

Ultimate Ideas

ABM is undoubtedly not a high-yield revenue or a excessive dividend development inventory. However what it lacks in pleasure, it makes up for with consistency. ABM’s lengthy and spectacular historical past of paying a dividend must be revered, because the Dividend Kings are uncommon compared to the 1000’s of publicly traded shares out there.

ABM’s natural development stays intact, and acquisitions contribute to its development. Progress from right here relies upon upon potential worldwide enlargement in addition to margin good points, the latter of which has been exhausting to return by lately. As well as, the corporate has a comparatively new tailwind of share repurchases.

With a low valuation and respectable development prospects forward, whole annual returns may very well be substantial, at 10% yearly, over the subsequent 5 years. ABM is a purchase because of its excessive anticipated return and lengthy historical past of dividend will increase.