14.5% Yielder... or Serial Dividend Cutter?

Marc shares his grade on an intriguing lender in this week's Safety Net. [Shield] AN OXFORD CLUB PUBLICATION Loyal reader since April 2024 [Wealthy Retirement]( [View in browser]( SPONSORED Rate Cut Set to Trigger Massive Gains WHERE??? Alex Green has a warning for anyone hoping for big gains after the Fed cuts rates: "Investors who are completely focused on the same investments as everyone else are making a huge mistake." Over the past 75 years, rate cuts have been shown to power a small group of overlooked stocks to extraordinary heights. ... with the best stocks having soared as much as 30X or even 40X during a rate cut year. [When Rates Drop] He calls them "Power Stocks." Yet, chances are, you haven't heard of them. At Alexander Green's Emergency State-of-the-Market Summit, he's going to change all of that. You'll discover who the biggest beneficiaries of the Fed's decision is set to be... and how you can play it. PLUS you'll hear a shocking prediction from Alex. [REGISTER HERE NOW.]( (Clicking the link above automatically registers you for the Alexander Green's Emergency State-of-the-Market Summit, a free subscription to Liberty Through Wealth, and offers from us and our affiliates that we think might interest you. You can unsubscribe at any time. [Privacy Policy.]( [SAFETY NET]( [FS KKR Capital: Intriguing 14.5% Yielder... or Serial Dividend Cutter?]( [Marc Lichtenfeld, Chief Income Strategist, The Oxford Club]( [Marc Lichtenfeld]( FS KKR Capital (NYSE: FSK) is a business development company that lends money to privately owned businesses that otherwise couldn't get a loan from a bank. FS KKR's portfolio is worth $14.1 billion and contains loans to 208 companies, which have a median EBITDA, or earnings before interest, taxes, depreciation, and amortization, of $124 million. Software is the top sector in the portfolio, accounting for nearly 16% of its holdings, followed by capital goods at almost 14% and commercial and professional services at just under 13%. But what's really exciting to investors is the fact that the portfolio yields 12% and the stock yields a whopping 14.5%. Can investors expect to keep earning such a high yield going forward? Because FS KKR is a lender, we look at a metric called net interest income to determine whether it can afford to pay its dividend. Net interest income is the amount of income a company generates from its loans after paying its bills. FS KKR has done an excellent job of growing its net interest income over the past few years. [Chart: Steady Net Interest Income Growth]( [View larger image]( In 2023, FS KKR paid shareholders $823 million in dividends, or 62% of its net interest income. This year, even though the total dividend payout is forecast to increase to $964 million, the payout ratio is projected to dip to 59% because net interest income is expected to rise by 23%. So the company can easily afford its dividend. SPONSORED ["The Single Most Predictable, Profitable, Income-Gushing Investment of My 40-Year Career" - Alexander Green]( [Reach a Golden Star]( Thanks to a major mistake by Vladimir Putin... Wall Street is now projecting a rise from $30 to $280 for one energy stock. The company has seen profits rise 2,400% since 2020... it pays a 10% dividend... and it's now able to make up to $200 million per shipment of its product. [Here's everything you need to know from legendary stock picker Alexander Green...]( FS KKR's current regular quarterly dividend is $0.64 per share, which comes out to a 13.1% yield. When we include the special dividend, which the company typically pays several times each year, the yield climbs to 14.5%. However, FS KKR has cut its regular dividend several times over the past decade. [Chart: FS KKR's Dividend Has Not Been Stable]( [View larger image]( We've seen a lot of companies like this in Safety Net lately: high yielders that are generating plenty of cash flow to pay their dividends but have track records of cutting their payouts when necessary. FS KKR Capital is in that exact situation. I don't believe a dividend cut is imminent. But if net interest income starts to slip, be aware that management is not afraid to slash the payout to shareholders. Dividend Safety Rating: C [Dividend Grade Guide]( What stock's dividend safety would you like me to analyze next? Leave the ticker in the comments section. You can also take a look to see whether we've written about your favorite stock recently. Just click on the word "Search" at the top right part of the [Wealthy Retirement homepage]( type in the company name and hit "Enter." Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds. [Leave a Comment]( [Marc's Recent Winners]( [Investment U Conference 2025 - Ponte Vedra Inn & Club in Ponte Vedra Beach, Florida, March 30-April 2, 2025]( BUILD AND PROTECT YOUR WEALTH [Alex Green Wants to Give You This "Gift" (Valued at $4,000)! The First 75 People to Respond Before Midnight Can Get This 🎁]( [Turning Political Drama into Potential Gains]( [Top Trader Reveals "One Ticker Payouts": One Ticker... One Trade... 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