KKR's (NYSE:KKR) Upcoming Dividend Will Be Larger Than Last Year's
KKR & Co. Inc.'s (NYSE:KKR) dividend will be increasing from last year's payment of the same period to $0.165 on 6th of June. Although the dividend is now higher, the yield is only 1.4%, which is below the industry average.
Check out our latest analysis for KKR
KKR Is Paying Out More Than It Is Earning
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Even in the absence of profits, KKR is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.
The next 12 months is set to see EPS grow by 162.8%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 145%, which probably can't continue without putting some pressure on the balance sheet.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from $1.22 total annually to $0.66. The dividend has shrunk at around 6.0% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend's Growth Prospects Are Limited
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. However, KKR's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings growth isn't particularly strong, and if the company isn't able to become profitable fairly soon, the dividend could come under pressure.
The Dividend Could Prove To Be Unreliable
In summary, while it's always good to see the dividend being raised, we don't think KKR's payments are rock solid. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for KKR (of which 1 is significant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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