Qifu Technology, Inc.'s (NASDAQ:QFIN) dividend will be increasing from last year's payment of the same period to CN¥0.59 on 1st of November. This will take the dividend yield to an attractive 4.8%, providing a nice boost to shareholder returns.

View our latest analysis for Qifu Technology

Qifu Technology's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Qifu Technology was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 47.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 2.5% by next year, which is in a pretty sustainable range.

Qifu Technology's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2021, the annual payment back then was CN¥7.07, compared to the most recent full-year payment of CN¥8.55. This means that it has been growing its distributions at 6.6% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Qifu Technology might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Qifu Technology has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Qifu Technology's prospects of growing its dividend payments in the future.

Qifu Technology Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Qifu Technology is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Qifu Technology that investors should know about before committing capital to this stock. Is Qifu Technology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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