Find a LatLng at a distance of radius units from center LatLng on Map 
now convert both these LatLngs to screenCoordinates
Use the formula used to construct a cirle x = Rsin(theta) , y = Rcos(theta)
you divide the circle into N segments and then draw polylines(drawn on map) on the circumference of the circle converting the screen coordinates to LatLngs 
more the number of N more it looks like a circle , I have used N = 120 according the zoom level ,I am using 13.
private void addDottedCircle(double radius) {//radius is in kms
    clearDottedCircle();
    LatLng center,start,end;
    Point screenPosCenter,screenPosStart,screenPosEnd;
    Projection p = mMap.getProjection();
    center = searchCenterMarker.getPosition();
    start = new LatLng(center.latitude + radius/110.54,center.longitude);
    // radius/110.54 gives the latitudinal delta we should increase so that we have a latitude at radius distance
    // 1 degree latitude is approximately 110.54 kms , so the above equation gives you a rough estimate of latitude at a distance of radius distance 
    screenPosCenter = p.toScreenLocation(center);
    screenPosStart = p.toScreenLocation(start);
    double R = screenPosCenter.y - screenPosStart.y;
    int N = 120;//N is the number of parts we are dividing the circle
    double T = 2*Math.PI/N;
    double theta = T;
    screenPosEnd = new Point();
    screenPosEnd.x = (int)(screenPosCenter.x-R*Math.sin(theta));
    screenPosEnd.y = (int) (screenPosCenter.y-R*Math.cos(theta));
    end = p.fromScreenLocation(screenPosEnd);
    for(int i =0;i<N;i++){
        theta+=T;
        if(i%2 == 0){
            //dottedCircle is a hashmap to keep reference to all the polylines added to map
            dottedCircle.add(mMap.addPolyline(new PolylineOptions().add(start,end).width(5).color(Color.BLACK)));
            screenPosStart.x = (int) (screenPosCenter.x-R*Math.sin(theta));
            screenPosStart.y = (int) (screenPosCenter.y-R*Math.cos(theta));
            start = p.fromScreenLocation(screenPosStart);
        }
        else{
            screenPosEnd.x = (int)(screenPosCenter.x-R*Math.sin(theta));
            screenPosEnd.y = (int) (screenPosCenter.y-R*Math.cos(theta));
            end = p.fromScreenLocation(screenPosEnd);
        }
    }
}
