Exploring the Sustainability of FS KKR Capital Corp's Dividends
Introduction to FS KKR Capital Corp
FS KKR Capital Corp (FSK, Financial) recently announced a dividend of $0.70 per share, payable on July 2, 2024, with the ex-dividend date set for June 12, 2024. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. This analysis utilizes data from GuruFocus to delve into FS KKR Capital Corp's dividend performance and evaluate its sustainability.
Understanding FS KKR Capital Corp
FS KKR Capital Corp is a business development company based in the United States, specializing in investments in senior secured and second lien secured loans of private middle market U.S. companies. The firm focuses on providing customized credit solutions to private upper middle-market companies, typically those with annual EBITDA of at least $50 million at the time of investment.
A Look at FS KKR Capital Corp's Dividend History
FS KKR Capital Corp has maintained a consistent dividend payment record since 2014, with dividends currently distributed on a quarterly basis. Below is a chart that illustrates the annual Dividends Per Share to track historical trends.
Examining FS KKR Capital Corp's Dividend Yield and Growth
Currently, FS KKR Capital Corp has a 12-month trailing dividend yield of 13.68% and a forward dividend yield of 13.68%, indicating an expectation of consistent dividend payments over the next year. Over the past three years, the annual dividend growth rate was 2.30%, which decreased to -2.90% per year over a five-year period. The 5-year yield on cost for FS KKR Capital Corp stock is approximately 11.81%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, it is important to evaluate the company's dividend payout ratio, which is currently 1.17. This suggests that the company may be distributing more than it earns, potentially jeopardizing future dividends. Furthermore, FS KKR Capital Corp's profitability rank is 4 out of 10, indicating moderate earnings capability, which could impact dividend sustainability. The company has reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
FS KKR Capital Corp's growth rank of 4 out of 10 suggests limited growth prospects. This assessment, combined with the payout ratio and profitability rank, raises concerns about the long-term sustainability of its dividends.
Conclusion
While FS KKR Capital Corp offers a high dividend yield, the company's financial health and growth metrics suggest potential risks in maintaining these payouts. Investors should consider these factors when evaluating the attractiveness of FS KKR Capital Corp as a dividend investment. For those looking to explore further, GuruFocus Premium provides tools such as the High Dividend Yield Screener to identify high-yield investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
