Assessing the Sustainability and Growth of Nucor Corp's Dividends
Nucor Corp (NYSE:NUE) recently announced a dividend of $0.54 per share, payable on 2024-02-09, with the ex-dividend date set for 2023-12-28. 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 look into Nucor Corp's dividend performance and assess its sustainability.
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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.
Nucor Corp's Dividend Analysis
A Glimpse at 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.
Breaking Down Nucor Corp's Dividend Yield and Growth
As of today, Nucor Corp currently has a 12-month trailing dividend yield of 1.15% and a 12-month forward dividend yield of 1.21%. This suggests an expectation of increased dividend payments over the next 12 months.
Nucor Corp's dividend yield of 1.15% is near a 10-year low and underperforms than 75.07% of global competitors in the Steel industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
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 1.47%.
Nucor Corp's Dividend Analysis
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 2023-09-30, Nucor Corp's dividend payout ratio is 0.10.
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 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The 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 approximately 86.56% 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 89.00% per year on average, a rate that outperforms approximately 85.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 45.00%, which outperforms approximately 85.91% of global competitors, is a testament to its strong financial health.
Next Steps
In conclusion, Nucor Corp's consistent dividend payments, remarkable status as a dividend king, and low payout ratio all point to a sustainable dividend profile. The company's robust profitability and impressive growth metrics further bolster the case for its dividends' sustainability. While the current dividend yield may not be the most attractive in the steel industry, the history of dividend growth and the company's financial health suggest that Nucor Corp remains a solid choice for value investors seeking reliable income streams. With these factors in mind, investors should consider whether Nucor Corp fits into their long-term investment strategy.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
