Unpacking the Dividend History, Yield, and Growth of FS KKR Capital Corp (FSK, Financial)
FS KKR Capital Corp (FSK) recently announced a dividend of $0.7 per share, payable on 2023-10-03, with the ex-dividend date set for 2023-09-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into FS KKR Capital Corps dividend performance and assess its sustainability.
Understanding FS KKR Capital Corp's Business
FS KKR Capital Corp is a business development company based in the United States. Its portfolio is comprised of investments in senior secured loans and second lien secured loans of private middle market U.S. companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S. companies. It is focused on providing customized credit solutions to private upper middle-market companies, which it generally defines as companies with annual EBITDA of at least $50 million at the time of investment.
Exploring FS KKR Capital Corp's Dividend History
FS KKR Capital Corp has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Deciphering FS KKR Capital Corp's Dividend Yield and Growth
As of today, FS KKR Capital Corp currently has a 12-month trailing dividend yield of 12.72% and a 12-month forward dividend yield of 13.52%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, FS KKR Capital Corp's annual dividend growth rate was -5.10%. Extended to a five-year horizon, this rate decreased to -6.10% per year. Based on FS KKR Capital Corp's dividend yield and five-year growth rate, the 5-year yield on cost of FS KKR Capital Corp stock as of today is approximately 9.29%.
Assessing the Sustainability of FS KKR Capital Corp's Dividend
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, FS KKR Capital Corp's dividend payout ratio is 2.60. This may suggest that the company's dividend may not be sustainable.
FS KKR Capital Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks FS KKR Capital Corp's profitability 3 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of past 10 years.
Looking at FS KKR Capital Corp's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. FS KKR Capital Corp's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and FS KKR Capital Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. FS KKR Capital Corp's revenue has increased by approximately -43.20% per year on average, a rate that underperforms than approximately 89.59% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, FS KKR Capital Corp's earnings increased by approximately -44.80% per year on average, a rate that underperforms than approximately 86.87% of global competitors.
Conclusion
While FS KKR Capital Corp has a history of consistent dividend payments, its negative dividend growth rate and high payout ratio raise concerns about the sustainability of future dividends. The company's low profitability and growth ranks further underscore these concerns. Therefore, investors should exercise caution and conduct further research before making investment decisions based on dividend yield alone.
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