This article first appeared on GuruFocus.
FS KKR Capital Corp (NYSE:FSK) recently announced a total dividend of $0.44 per share, with the ex-dividend date set for 2026-09-16. This distribution consists entirely of a $0.44 per share cash dividend, payable on 2026-10-02 to shareholders of record as of the ex-dividend date. For income-focused investors, the ex-dividend date is a critical marker: investors must own shares before 2026-09-16 to qualify for this payment. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using data from GuruFocus, let's look into FS KKR Capital Corp's dividend performance and assess its sustainability.
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FS KKR Capital Corp is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (BDC). BDCs are organizations that invest in small and medium-sized private companies, and they are required to distribute at least 90% of their taxable income to shareholders, which typically results in high dividend yields. The company's investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. 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.
FS KKR Capital Corp has maintained a consistent dividend payment record since 2014, giving the company more than a decade of distributions to evaluate. Dividends are currently distributed on a quarterly basis, meaning shareholders receive four payments per year rather than a single annual payout. This cadence provides more frequent cash flow for income-oriented investors, though it also means each payment is smaller in isolation. Below is a chart showing annual Dividends Per Share for tracking historical trends, which helps investors see how the payout has evolved over time.
As of today, FS KKR Capital Corp currently has a 12-month trailing dividend yield of 19.24% and a 12-month forward dividend yield of 17.03%. The trailing yield reflects dividends actually paid over the past year, while the forward yield estimates future payments based on the current dividend rate. The gap between the two figures suggests an expectation of decreased dividend payments over the next 12 months. Even so, both yields sit well above the broader market average, underscoring the income appeal that draws many value investors to business development companies like this one.
Over the past three years, FS KKR Capital Corp's annual dividend growth rate was 2.50%. Extended to a five-year horizon, this rate stayed the same, indicating a steady but modest pace of distribution increases. And over the past decade, FS KKR Capital Corp's annual dividends per share growth rate stands at -3.00%, a reminder that the long-term trend has been one of contraction rather than expansion. This mixed record matters for investors weighing current income against the prospect of future payout growth.
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 21.77%. Yield on cost measures the annual dividend return relative to an investor's original purchase price, assuming reinvested dividends and growth over a five-year holding period. A figure above 20% suggests that long-term holders could see substantial income relative to their initial investment, though this projection depends heavily on the company maintaining its distribution.
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 2026-06-30, FS KKR Capital Corp's dividend payout ratio is 0.00, a reading that indicates insufficient data to calculate a meaningful figure rather than a true zero payout.
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 2026-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of the past 10 years, a solid record of profitability even if the overall rank remains low. Investors should weigh this consistency against the weaker composite score when judging the safety of the payout.
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. Growth rank evaluates factors such as revenue, earnings, and operating cash flow trends over time, so a low score signals that the company's underlying business momentum is lagging its peers. For dividend investors, weak growth can eventually pressure distributions if earnings fail to keep pace with payouts.
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 0.70% per year on average, a rate that underperforms approximately 61.45% of global competitors. This modest top-line expansion suggests the company is growing, but at a pace slower than many of its industry peers.
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 -50.00% per year on average, a rate that underperforms approximately 91.64% of global competitors. This sharp earnings decline raises questions about the company's ability to maintain its current distribution level without eroding shareholder value over time.
FS KKR Capital Corp's upcoming $0.44 per share dividend, payable on 2026-10-02 with an ex-dividend date of 2026-09-16, offers income investors an attractive near-term yield. However, the broader picture is mixed. The 19.24% trailing yield and 21.77% five-year yield on cost are compelling, yet a profitability rank of 3 out of 10, a growth rank of 3 out of 10, and a three-year earnings decline of roughly 50% per year all point to sustainability concerns. Value investors should weigh the high current income against these weaker fundamental signals before committing capital. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.