Exploring the Sustainability and Growth of Commercial Metals Co's Dividend
Commercial Metals Co (CMC, Financial) recently announced a dividend of $0.16 per share, payable on 2023-11-09, with the ex-dividend date set for 2023-10-25. As investors anticipate this upcoming payment, it's important to examine the company's dividend history, yield, and growth rates. Using data from GuruFocus, we delve into Commercial Metals Co's dividend performance and assess its sustainability.
What Does Commercial Metals Co Do?
Commercial Metals Co operates steel mills, steel fabrication plants, and metal recycling facilities primarily in the United States. It manufactures rebar and structural steel, which are key product categories for the nonresidential construction sector. The company operates through two reportable segments: North America and Europe.
A Glimpse at Commercial Metals Co's Dividend History
Commercial Metals Co has maintained a consistent dividend payment record since 1984, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1987, earning it the status of a dividend aristocrat. This title is given to companies that have increased their dividend each year for at least the past 36 years.
Breaking Down Commercial Metals Co's Dividend Yield and Growth
As of today, Commercial Metals Co currently has a 12-month trailing dividend yield of 1.60% and a 12-month forward dividend yield of 1.60%. This suggests an expectation of consistent dividend payments over the next 12 months.
Over the past three years, Commercial Metals Co's annual dividend growth rate was 5.30%. This rate decreased to 2.20% per year over a five-year horizon. Over the past decade, the company's annual dividends per share growth rate stands at 0.70%.
Based on Commercial Metals Co's dividend yield and five-year growth rate, the 5-year yield on cost of Commercial Metals Co stock as of today is approximately 1.78%.
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 2023-05-31, Commercial Metals Co's dividend payout ratio is 0.08.
Commercial Metals Co's profitability rank is 8 out of 10 as of 2023-05-31, 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
For a company to ensure the sustainability of dividends, it must have robust growth metrics. Commercial Metals Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Commercial Metals Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. 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.
Lastly, the company's 5-year EBITDA growth rate of 73.50% outperforms approximately 95.41% of global competitors.
Next Steps
In conclusion, Commercial Metals Co's consistent dividend payments, growing dividend yield, low payout ratio, high profitability, and strong growth metrics make it an attractive option for value investors seeking sustainable dividends. It's important for potential investors to continue monitoring these factors to make informed decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
