Assessing the Upcoming Dividend and Historical Performance of FSK
FS KKR Capital Corp (FSK, Financial) recently announced a dividend of $0.7 per share, payable on 2024-01-03, with the ex-dividend date set for 2023-12-12. 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 look into FS KKR Capital Corps dividend performance and assess its sustainability.
What Does FS KKR Capital Corp Do?
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.
A Glimpse at 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.
Breaking Down 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 13.29% and a 12-month forward dividend yield of 13.68%. 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 9.70%.
The Sustainability Question: Payout Ratio and Profitability
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 2023-09-30, FS KKR Capital Corp's dividend payout ratio is 1.14, which 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 4 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. FS KKR Capital Corp's growth rank of 4 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 decreased by approximately -43.20% per year on average, a rate that underperforms approximately 91.01% 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 have decreased by approximately -44.80% per year on average, a rate that underperforms approximately 88.39% of global competitors.
Next Steps for Investors
In conclusion, while FS KKR Capital Corp offers a high dividend yield, its negative growth rates and payout ratio raise concerns regarding the sustainability of its dividends. Investors should carefully consider the company's long-term potential to maintain and grow its dividend payments in light of the profitability challenges and growth metrics. Those seeking to diversify their portfolio with dividend-paying stocks may benefit from using tools like the High Dividend Yield Screener available to GuruFocus Premium users.
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.
