How Likely Is a Dividend Cut From ABM Industries?

This is your daily dividend safety check. Today, we consider ABM Industries as its earning call is on December 16, 2020 after the bell. Let's look at ABM Industries ABM to see if its 1.93% dividend yield is safe, judging by its earnings to dividend payout ratio and history of dividend cuts.

ABM Industries's Payout Ratio

Payout ratio is equal to dividends per share divided by earnings per share, and is used as an important measure of dividend affordability. ABM Industries has a payout ratio of 24.0%, which is low enough to not cause concern. A relatively low payout ratio like this (i.e. below than 75%) suggests that a company has plenty of money to cover its dividend. A ratio which is closer to (or greater than) 100% could indicate that a company is struggling to afford its dividend.

Has ABM Industries Cut Its Dividend in the Recent Past?

Generally, past behavior is not highly predictive of what's to come. However, companies that have a recent history of dividend cuts are more likely to cut them again due to less incentive to appease income investors than companies with historically consistent or rising dividends. In the last few years, ABM Industries has not cut its dividend. Although there is no guarantee of dividend safety, this does imply the company's management is reluctant to cut it.

How Safe Is ABM Industries's Dividend Overall?

ABM Industries has failed neither of our dividend safety tests. It has a low payout ratio and no recent case of dividend cut. With all of this in mind, it is unlikely that ABM Industries will cut its dividend next quarter.

Looking for more help identifying reliable investments? Check out Benzinga's Breakout Opportunity Letter.