Abacus Group (ASX: ABG)
What is MP's view on ABG after the sale of their share holdings in SKG. How suitable is ABG for dividend yield? Would it be a dividend trap at the current price?
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Answer
Hi Gregory,
Abacus Group (ABG) has agreed to sell its remaining stake in Storage King Group for $284.8m, completing its exit from the self-storage operator and sharpening its focus on commercial property. The divestment comprises a 10.37% stake sold to Ki Corporation at $1.20 per share, raising $163.5m, and a further 9.23% block trade underwritten by Barrenjoey at $1.00 per share, raising $121.3m; part of the Ki transaction remains subject to shareholder approval in November.
Proceeds will be used to reduce debt and focus ABG on its Sydney and Brisbane commercial property portfolio, with gearing expected to fall to ~30%. While the sale reduces NTA by 7c to $1.52 per security.
- ABG expects its FY27 distribution of 6.7c to come in at the top end of its target payout range, with ~67% expected to be fully franked – in other words an attractive ~7.7% yield, mostly franked.
The company has maintained its distribution for the past three years, but as you touch on, the share price can still come under pressure — ABG has fallen ~30% over the past 12 months. The broader A-REIT sector has also struggled amid RBA rate-hike concerns and weakness in the property market.
However, ABG’s 2026 decline has been driven primarily by earnings downgrades rather than multiple compression, with its forward P/E remaining relatively stable as EPS expectations were progressively cut, particularly following its FY26 result.
- ABG’s dividend is eye catching, however, within property we would prefer to stay with owners of higher quality assets, and would actually have a preference for SKG at current prices.
