Why ABM Industries (ABM) is a Great Dividend Stock Right Now

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.ABM Industries in FocusBased in New York, ABM Industries (ABM) is in the Business Services sector, and so far this year, shares have seen a price change of 3.56%. The provider of cleaning and other maintenance services for commercial buildings, hospitals and airports is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2% compared to the Building Products - Maintenance Service industry's yield of 0.67% and the S&P 500's yield of 1.51%.Looking at dividend growth, the company's current annualized dividend of $1.06 is up 17.8% from last year. ABM Industries has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 5.32%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, ABM Industries's payout ratio is 25%, which means it paid out 25% of its trailing 12-month EPS as dividend.Earnings growth looks solid for ABM for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.71 per share, which represents a year-over-year growth rate of 3.92%.Bottom LineInvestors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that ABM is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ABM Industries Incorporated (ABM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks