Should I buy Royal Mail shares today at 590p?
Over the past 12 months, Ive recommended Royal Mail (LSE: RMG) shares on several occasions. I think the companys fortunes have changed entirely since this time last year. Surging parcel delivery volumes have helped the company outperform expectations. And as profitability has jumped, the corporation has set aside more cash to reinvest back into the business. I think this is the right decision. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential... However, as the company ploughs profits back into its operations, shareholders could be left wanting. Indeed, under managements new dividend policy, Royal Mail shares will only offer a modest level of income. Over the past few years, the company has struggled due to a lack of investment. Falling profits have restricted spending plans, which means management hasnt been able to invest in the business. This left the enterprise woefully underprepared for the future. Management is now planning to rectify this error. Last year, the company announced it would construct two fully automated sorting facilities in the North West of England. On top of this, management is also planning significant investments in automation across the rest of its network. Unfortunately, this wont come cheap. Planned capital spending will be well above 400m in the current financial year. Meanwhile, the group is also investing 160m in its international arm, GLS. This spending is essential, but it does mean the firm cant afford to pay significant dividends to investors. In the current year, the company is planning to pay out 20p per share for the financial year. At the current share price of 590p, Royal Mail shares offer a dividend yield of 3.4%. Long gone are the days when the stock used to provide a yield of more than 5%. Management has said the company will adopt a sustainable progressive dividend policy in the years ahead. Still, I reckon that as long as capital spending remains high, there wont be a significant increase in the payout. This is a difficult question to answer. On the one hand, it looks as if the stock is firing on all cylinders. On the other, its difficult to tell if last years growth was just a one-off boost, or if the higher demand for parcel shipments is here to stay. I think the answer to this question is somewhere in the middle. Shipments may remain elevated, but I dont think they will stay at pandemic levels. Still, if parcel delivery volumes continue to increase, the companys spending initiatives may pay off. In this scenario, Royal Mails sales and profits could continue to expand. Therefore, I think, on balance, the risks of owning Royal Mail shares outweigh the potential for reward. The company is spending heavily to modernise its operations, but theres a chance this spending may not yield results. And if profits start to slide, the stock could fall back as well.