A comprehensive analysis of Nucor Corp's dividend history, yield, growth, and the indicators of its sustainability
Nucor Corp(NUE, Financial) recently announced a dividend of $0.51 per share, payable on 2023-11-09, with the ex-dividend date set for 2023-09-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Nucor Corps dividend performance and assess its sustainability.
Understanding Nucor Corp's Business Model
Nucor Corp manufactures steel and steel products. The company also produces direct reduced iron for use in its steel mills. The operations include international trading and sales companies that buy and sell steel and steel products manufactured by the company and others. The operating business segments are: steel mills, steel products, and raw materials, the steel mills segment derives maximum revenue. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading businesses; rebar distribution businesses; and Nucor's equity method investments in NuMit and NJSM.
Tracing Nucor Corp's Dividend History
Nucor Corp has maintained a consistent dividend payment record since 1973. Dividends are currently distributed on a quarterly basis. Nucor Corp has increased its dividend each year since 1973. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 50 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Analyzing Nucor Corp's Dividend Yield and Growth
As of today, Nucor Corp currently has a 12-month trailing dividend yield of 1.32% and a 12-month forward dividend yield of 1.32%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Nucor Corp's annual dividend growth rate was 7.80%. Extended to a five-year horizon, this rate decreased to 5.10% per year. And over the past decade, Nucor Corp's annual dividends per share growth rate stands at 2.40%. Based on Nucor Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Nucor Corp stock as of today is approximately 1.69%.
Assessing the Sustainability of Nucor Corp's Dividend
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Nucor Corp's dividend payout ratio is 0.09.
Nucor Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nucor Corp's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Nucor Corp's Growth Metrics and Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Nucor Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Nucor Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nucor Corp's revenue has increased by approximately 28.70% per year on average, a rate that outperforms than approximately 86.84% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Nucor Corp's earnings increased by approximately 90.90% per year on average, a rate that outperforms than approximately 85.45% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 43.30%, which outperforms than approximately 83.87% of global competitors.
Conclusion
In conclusion, Nucor Corp's consistent dividend payments, respectable growth rate, low payout ratio, high profitability, and impressive growth metrics all indicate a sustainable dividend profile. These factors make Nucor Corp an attractive option for value investors seeking consistent dividend returns. However, as always, investors should conduct their due diligence and consider their investment goals and risk tolerance before investing.
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