Shares of Yirendai Ltd (NYSE:YRD) will begin trading ex-dividend in 3 days. To qualify for the dividend check of CN¥0.28 per share, investors must have owned the shares prior to 27 April 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Yirendai’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Yirendai
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Yirendai pass our checks?
The current trailing twelve-month payout ratio for the stock is 8.17%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 13.39%, leading to a dividend yield of around 1.99%. Furthermore, EPS should increase to CN¥27.12. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Yirendai as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether YRD one as a stable dividend player. Compared to its peers, Yirendai has a yield of 1.63%, which is on the low-side for Consumer Finance stocks.
Whilst there are few things you may like about Yirendai from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for YRD’s future growth? Take a look at our free research report of analyst consensus for YRD’s outlook.
- Valuation: What is YRD worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether YRD is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.