Yiren Digital (NYSE:YRD) Will Pay A Larger Dividend Than Last Year At US$0.22

Yiren Digital Ltd. ( NYSE:YRD ) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of October to US$0.22. This will take the annual payment to 7.3% of the stock price, which is above what most companies in the industry pay.

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Yiren Digital's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Yiren Digital's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 27.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 2.2% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Yiren Digital

Yiren Digital Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Yiren Digital has grown earnings per share at 27% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Yiren Digital Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Yiren Digital that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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