An In-depth Analysis of Steel Dynamics Inc's Dividend History, Yield, Growth Rates, and Future Prospects
Steel Dynamics Inc (STLD, Financial) recently announced a dividend of $0.43 per share, payable on 2023-10-16, 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 Steel Dynamics Inc's dividend performance and assess its sustainability.
What Does Steel Dynamics Inc Do?
Steel Dynamics Inc operates scrap-based steel minimills with roughly 16 million tons of annual steel production capacity. The company's segments include steel operations, metals recycling operations, and steel fabrication operations, with the steel operations segment generating the maximum revenue.
A Glimpse at Steel Dynamics Inc's Dividend History
Steel Dynamics Inc has maintained a consistent dividend payment record since 2004, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2010, earning it the honor of being listed as a dividend achiever. This distinction is given to companies that have increased their dividend each year for at least the past 13 years.
Breaking Down Steel Dynamics Inc's Dividend Yield and Growth
As of today, Steel Dynamics Inc currently has a 12-month trailing dividend yield of 1.44% and a 12-month forward dividend yield of 1.61%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Steel Dynamics Inc's annual dividend growth rate was 12.30%. Extended to a five-year horizon, this rate increased to 15.20% per year. Over the past decade, Steel Dynamics Inc's annual dividends per share growth rate stands at an impressive 12.90%.
Based on Steel Dynamics Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Steel Dynamics Inc stock as of today is approximately 2.92%.
The Sustainability Question: Payout Ratio and Profitability
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, Steel Dynamics Inc's dividend payout ratio is 0.09.
Steel Dynamics Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Steel Dynamics Inc's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Steel Dynamics Inc'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 Steel Dynamics Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Steel Dynamics Inc's revenue has increased by approximately 36.50% per year on average, a rate that outperforms approximately 91.62% 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, Steel Dynamics Inc's earnings increased by approximately 90.20% per year on average, a rate that outperforms approximately 85.21% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 41.70% outperforms approximately 81.36% of global competitors.
In conclusion, Steel Dynamics Inc's consistent dividend payments, impressive growth rate, low payout ratio, and strong profitability and growth metrics illustrate a promising future for the company. It appears to be well-positioned to maintain its dividend payments, making it an attractive option for investors seeking steady income. However, investors should continue to monitor these metrics to ensure the company's financial health and dividend sustainability.
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