Radius Recycling’s (NASDAQ:RDUS) Dividend Will Be $0.1875 – Simply Wall St

Radius Recycling, Inc. (NASDAQ:RDUS) will pay a dividend of $0.1875 on the 6th of May. This makes the dividend yield 3.8%, which will augment investor returns quite nicely.

View our latest analysis for Radius Recycling

Radius Recycling Doesn’t Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Even in the absence of profits, Radius Recycling is paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Earnings per share is forecast to rise by 119.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 171%, which probably can’t continue without putting some pressure on the balance sheet.

NasdaqGS:RDUS Historic Dividend April 7th 2024

Radius Recycling Has A Solid Track Record

The company has an extended history of paying stable dividends. There hasn’t been much of a change in the dividend over the last 10 years. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren’t as good as they seem. Over the past five years, it looks as though Radius Recycling’s EPS has declined at around 9.6% a year. A modest decline in earnings isn’t great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Radius Recycling’s Dividend Doesn’t Look Sustainable

Overall, it’s nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we’ve picked out 2 warning signs for Radius Recycling that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Valuation is complex, but we’re helping make it simple.

Find out whether Radius Recycling is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.