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“I’d buy this stock if the broader market were overvalued and I couldn’t find better opportunities elsewhere. Among the ‘no-brainer’ blue chip dividend stalwarts, ABM is almost always one of the cheapest—and that alone makes it worth a spot on your watchlist.”
I wrote that back in December 2025, when ABM Industries Incorporated ($ABM) was trading above $45 per share.
Since then, the stock has slid significantly, with shares now hovering around $37. ABM isn’t the “best” name in the recent sell-off, but it is one of the cheapest. With a single-digit valuation and a 3%+ starting yield, it’s enough to get my attention.
My interest is largely driven by ABM’s nuts-and-bolts fundamentals.
ABM isn’t a market-beater, and it’s far from an exciting or innovative business. But, it is a Dividend King that consistently delivers inflation-beating raises while maintaining a low payout ratio.
For those unfamiliar…
ABM Industries Incorporated is a facilities services provider. The company employs janitors, electricians, technicians, and landscapers, deploying them across office buildings, airports, stadiums, hospitals, data centers, and factories throughout the United States.
More than 55% of Fortune 500 companies rely on ABM, and the firm services over six billion square feet of property each day.
ABM dates back to 1909 and has raised its dividend for 58 consecutive years, earning its coveted Dividend King status. Impressively, these raises continue to beat inflation. The most recent increase, announced last December, came in at an impressive 9.4%. Even better, the payout ratio remains conservative at just 32.01%.
The biggest drawback here is the business model itself, it’s low-margin and labor-intensive. Mopping floors will never scale like software.
The upside, however, is that sweeping floors, cleaning toilets, and replacing lightbulbs are non-discretionary. Even during an economic slowdown, someone needs to scrub the office and take out the trash.
Another advantage: valuation. ABM is significantly cheaper than many other blue chip stalwarts.
The stock currently trades at a price to earnings ratio of 9.47, with a 3.09% starting yield and a 5-year dividend CAGR of 7.81%. Compare that to The Coca-Cola Company ($KO), a default “safe haven” name, which trades at a 23.42 PE while offering a 2.80% yield and a 5-year dividend CAGR of just 4.54%.
When it comes to raw numbers, ABM investors are getting more bang for their buck.
ABM isn’t a market-beater, and even after the recent sell-off, it has underperformed the S&P 500 over the long term, with a 20-year average annual total return of 6.14%.
Still, this could be a solid blue chip income play. The yield is north of 3%, and if dividend growth tracks its 5-year pace, a new investor’s yield-on-cost could double in less than a decade.
With the ongoing sell-off, there are other dividend stocks I’m more interested in, such as Automatic Data Processing ($ADP), but I wouldn’t mind picking up some ABM here as well.
This is a Dividend King with a single-digit PE and a 3%+ starting yield. If shares simply rebound to the $45 range, where they traded as recently as February, that’s more than a 17% upside from ABM’s current levels.
To paraphrase Warren Buffett, ABM now looks like an “above-average company at a wonderful price.”
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Past performance isn't predictive; illustrative only. Investing risks principal; no securities offer. See important Disclaimers
Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.
