In many projects I needed the same, always doing it manually or using RoundedBitmapDrawable or external libs. I wish something included in the official lib (maybe we already have it and I don't know).
public static Bitmap getCircularBitmap(Bitmap bitmap, int borderWidth) {
int width = bitmap.getWidth();
int height = bitmap.getHeight();
Bitmap output = Bitmap.createBitmap(width, height, Bitmap.Config.ARGB_8888);
Canvas canvas = new Canvas(output);
final int color = 0xff424242;
final Paint paint = new Paint();
final Rect rect = new Rect(0, 0, width, height);
paint.setAntiAlias(true);
canvas.drawARGB(0, 0, 0, 0);
paint.setColor(color);
canvas.drawCircle(width / 2, height / 2, width / 2, paint);
paint.setXfermode(new PorterDuffXfermode(PorterDuff.Mode.SRC_IN));
canvas.drawBitmap(bitmap, rect, rect, paint);
// border
paint.setColor(Color.WHITE);
paint.setStrokeWidth(borderWidth);
paint.setStyle(Paint.Style.STROKE);
paint.setXfermode(null);
canvas.drawCircle(width / 2, height / 2, width / 2 - borderWidth / 2, paint);
return output;
}