Servcorp upgrades guidance, insiders keep buying. Is this ASX dividend stock quietly setting up?

Shares in Servcorp Ltd (ASX: SRV) are rocketing higher today, up 8.18% to $7.67 after the company delivered an upgrade to its FY26 outlook.

The global serviced offices provider released fresh guidance this afternoon, shedding light on how the business is tracking as FY26 progresses. Recent share price behaviour and shareholder activity are providing additional context.

Let’s take a closer look at the release.

FY26 guidance upgraded

In an ASX announcement released today, Servcorp lifted its FY26 outlook across all key metrics.

Underlying NPBT is now expected to be between $80 million and $84 million, up from previous guidance of $72 million to $76 million. Underlying free cash flow guidance was also upgraded to no less than $100 million, compared with prior guidance of at least $90 million.

Importantly for income investors, Servcorp said its dividend is not expected to be below 32 cents per share, up from a previous floor of 30 cents.

Management attributed the upgrade to strong operating momentum, improved occupancy, pricing discipline, and leverage from mature locations. Cost control and better cash conversion across the global portfolio also played a role.

The company now enters the year with a strong balance sheet, high cash levels, and no debt.

Insider buying sends a strong signal

One of the more notable developments over the past year has been the level of insider buying at Servcorp.

Founder, CEO, and Executive Chairman, Mr Alfred George Moufarrige, has been a consistent buyer of Servcorp shares. According to disclosed director transactions, he has purchased well over 400,000 shares across multiple transactions in 2025, with several large off-market buys around the $7 level.

While insider buying is never a guarantee of future performance, sustained buying by a founder-led CEO is often interpreted as a strong vote of confidence in the company’s outlook and valuation.

Dividend appeal and technical picture

At the current share price, Servcorp offers a trailing dividend yield of around 4%, fully franked. With free cash flow guidance upgraded and a payout ratio near 50%, the dividend appears well supported.

From a technical perspective, Servcorp shares remain in a broader uptrend. The stock is trading above its 200-day moving average, with support forming around $6.80 to $7. Resistance remains near the recent highs around $7.40.

Foolish Takeaway

Servcorp may not be the most exciting stock on the ASX, but steady earnings, rising cash flow, a solid dividend, and insider buying make it one to watch.

With upgraded guidance now in place and a strong balance sheet underpinning returns, the company appears well-positioned to deliver reliable income while continuing to compound value over time.

The post Servcorp upgrades guidance, insiders keep buying. Is this ASX dividend stock quietly setting up? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Servcorp. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.