Gerdau Raises Quarterly Dividend 89.5% to $0.036

Gerdau S.A. increased its quarterly dividend 89.5% to $0.036 per share from $0.019. The increase takes the annual dividend to $0.18 per share, equivalent to $18.00 in annual income for every 100 shares.

Why the dividend changed

The increase followed an improvement in Gerdau’s first-quarter earnings and operating profitability. Adjusted net income reached R$1.0 billion, adjusted EBITDA rose to R$3.0 billion and the adjusted EBITDA margin expanded to 17.7%. North America was the main source of resilience, benefiting from demand tied to renewable energy, data centers and manufacturing. Free cash flow remained positive at R$16 million despite working-capital consumption. Gerdau’s first-quarter results linked the distribution directly to that quarter’s performance.

Gerdau’s policy ties shareholder distributions to adjusted net income rather than maintaining a fixed payment. The company says cash generation is the basis for increasing absolute dividends, while quarterly distributions serve as advances against the mandatory annual dividend. That framework helps explain why GGB payments can move sharply between quarters. Gerdau’s dividend policy provides management with flexibility as steel prices, regional margins and working capital fluctuate.

Capital allocation also includes repurchases and investment. Gerdau entered 2026 with a new share-buyback authorization after completing its 2025 program, while setting R$4.7 billion of capital spending for the year. First-quarter capital expenditures were R$1.1 billion, primarily directed to Brazil and projects intended to improve efficiency and lower costs. The 2025 management report and first-quarter filing describe dividends, buybacks and strategic investment as parallel uses of capital.

Dividend track record

The latest increase does not establish a sustained growth streak. Gerdau has 0 consecutive years of dividend growth, and a past annual cut is recorded in 2024. The five-year record nevertheless shows 30.5% annual growth, reflecting the unusually strong distributions earlier in the period rather than a smooth progression.

Annual payments climbed to $0.45 in 2021 and $0.56 in 2022. They then fell 52.4% to $0.27 in 2023 and declined another 47.1% to $0.14 in 2024. The 2025 total was $0.06, down 57.7%. The sequence shows that Gerdau’s dividend behaves as a variable distribution tied to earnings and cash generation, not as a fixed-dollar commitment.

The quarterly record reinforces that interpretation. The payment was $0.019 with a March 12, 2026 ex-dividend date, increased to $0.036 with a May 15, 2026 ex-dividend date and subsequently reached $0.045 with an August 21, 2026 ex-dividend date. Those changes improved near-term income but did not erase the longer record of annual reductions.

Is the dividend covered?

The dividend consumes 58% of earnings. That leaves some accounting-earnings coverage, but the payout is large enough that future distributions remain sensitive to steel-cycle profitability, working-capital requirements and capital spending.

SmarterDividends assigns Gerdau a safety score of 59 and rates the dividend C, classified as borderline (50-65). In plain terms, current earnings cover the payment, but the margin of protection is not strong enough to offset the company’s variable payment history and exposure to cyclical operating conditions.

Yield and valuation

GGB’s forward yield is 3.70%, compared with a 1.88% median for the Basic Materials sector. The higher yield compensates investors with more current income, but it also sits alongside a record in which annual totals have changed materially from year to year.

At a share price of $4.79 and a market value of $9.4 billion, SmarterDividends estimates fair value at $2.10. Its valuation verdict is overvalued, representing 58% downside to fair value. The shares have recorded a 41.5% gain over the past year. The valuation assessment is separate from dividend coverage: a covered distribution does not by itself determine whether the share price is aligned with estimated fair value.

What to watch

The next quarterly results will show whether stronger operating performance continues to translate into cash after working-capital needs and investment. In the second quarter, Gerdau reported adjusted EBITDA of R$3.4 billion, adjusted net income of R$1.5 billion and positive free cash flow of R$237 million. The company had completed 45% of its R$4.7 billion capital-spending guidance. Gerdau’s second-quarter report attributed the improvement to pricing, sales mix and competitiveness initiatives.

Investors can also track progress on the Miguel Burnier mining platform, the Pindamonhangaba recycling center and the Midlothian expansion. These projects affect capital requirements and operating efficiency, both of which feed into the cash-generation framework management uses for dividends. The next declared payment will be especially relevant because the recent $0.019, $0.036 and $0.045 sequence confirms that Gerdau resets its distribution as conditions change.