FSK - FS KKR: Rising Non-Accruals But Still Out Earning The Distribution

2024-04-09 18:23:27 ET

Summary

• FS KKR Capital is a large BDC with a portfolio of debt investments that earns high levels of income.
• The majority of their portfolio consists of floating rate loans, which benefits from elevated interest rates.
• The company's dividend coverage is sufficient, but there are concerns about rising non-accruals and a decrease in interest coverage ratio.

Overview

I've lately covered a ton of BDCs (business development companies) recently, and FS KKR Capital Corp ( FSK ) is the next on my list. I love the high levels of income that you can achieve here while still having a risk profile that's easy enough to understand. There aren't many other sectors where you can get an instant 10%+ return on your money and create streams of passive income from dividends. In addition, many of these BDCs have such a high distribution level that they can sometimes have a total return that matches the greater indexes, like the S&P 500 ( SPY )....

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