Welcome to this series where I will be reviewing all the Dividend Kings and providing an overview and valuation calculation on the companies. Dividend Kings are a rare breed of Dividend Growth Companies. These companies have managed to raise their dividend for 50 or more years consecutively. Through all types of market swings, economic trouble, wars, recessions, these companies have seen it all and continue to reward shareholders with rising dividend income.
This week’s entry will focus on:
ABM – ABM Industries, Inc
Overview
ABM Industries, Inc. (ticker: ABM) is a leading provider of facility solutions. ABM’s comprehensive capabilities include janitorial, electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, landscape & turf, mission critical solutions and parking, provided through stand-alone or integrated solutions. ABM provides custom facility solutions in urban, suburban and rural areas to properties of all sizes – from schools and commercial buildings to hospitals, data centers, manufacturing plants and airports. ABM Industries Incorporated, which operates through its subsidiaries, was founded in 1909.
(Source: https://www.abm.com/about/)
Metrics:
Current Price: $44.99 (3/25/22)
Dividend Amount: $0.78
Dividend Yield: 1.73%
5 Year Dividend CAGR: 7.68%
Dividend Payout Ratio: 19.95%
Years of Dividend Increases: 54 Years
EPS: $1.87
P/E: 11.40
Analyst 5 Year Earnings Growth Estimate: 16%
Valuation:
Discounted Cash Flow (DCF) (10% RRR): $43.58
P/E Mean Reversion:$69.87
Dividend Yield Theory: $35.45
Average of the three: $49.63
Analyst 1 year Price Target: $57.50
Commentary:
ABM operates behind the scenes in thousands of companies and organizations providing facility solutions. They provide maintenance services to help keep facilities operating. This is the definition of a boring business, but boring is not a bad thing when you have a consistent flow of revenue from critical services. ABM allows organizations to outsource the maintenance of their facilities so that they can focus on the operations of the business. ABM recently acquired Able Services, another facilities maintenance company, in September 2021, which will add immediate growth to their revenue.
This slow and steady company has paid a dividend for 223 consecutive quarters! The dividend yield is low on a historical basis and the dividend growth is average. The current price is fairly valued and analysts see a slight increase in the stock price over the next year, with revenues increasing due to the continued reopening of the economy and as businesses bring back more employees.
The company is experiencing higher input costs from supplies and extra cleaning protocols but those costs should subside over the next few quarters. ABM’s stock price has been flat over the past 5 years but has steadily climbed over the past few decades and has provided a very strong long term return for its shareholders.
If you have a long timeframe this company will provide a steady income and moderate growth with solid financials and a robust business model.
Disclosure: I do not own ABM.