Last Update 3/10/25
KKR & Co. Inc. (NYSE: KKR) is a powerhouse in the world of private equity and alternative investments. Founded in 1976, the firm has built a reputation for making high-stakes deals, managing billions in assets, and delivering strong returns for its investors. While KKR is well known for its leveraged buyouts and alternative asset management, its dividend story is a bit different from the usual high-yielding, blue-chip companies dividend investors tend to favor.
For those focused on dividend income, KKR presents an interesting balance. The yield is on the lower side, but the company’s disciplined approach to capital allocation and strong cash flow provide the foundation for potential dividend growth. Let’s take a closer look at what KKR offers for income-focused investors.
Key Dividend Metrics
📌 Dividend Yield: 0.65% (Forward)
📌 Annual Dividend: $0.70 per share
📌 5-Year Average Yield: 1.03%
📌 Payout Ratio: 21.04% (Plenty of room for increases)
📌 Dividend Growth Streak: Not a traditional dividend aristocrat, but a consistent payer
📌 Ex-Dividend Date: February 14, 2025
📌 Last Dividend Payment: February 28, 2025
Dividend Overview
KKR’s dividend yield currently stands at 0.65%, which is relatively low compared to more traditional dividend stocks. This isn’t a company designed to generate high-yield passive income, but rather one that rewards patient investors with sustainable payouts. The firm maintains a modest payout ratio of just over 21%, which signals a cautious approach to dividends, leaving plenty of room for reinvestment into the business.
While some investors may look for higher yields elsewhere, KKR’s dividend strategy is built around long-term value creation rather than maximizing short-term payouts. This means shareholders benefit from a combination of capital appreciation and measured dividend growth.
Dividend Growth and Safety
Growth Potential
KKR has demonstrated a commitment to returning cash to shareholders, but its dividend growth has been somewhat inconsistent. The firm doesn’t fall into the category of dividend aristocrats, nor does it follow a predictable annual increase model. Instead, KKR’s ability to grow dividends largely depends on its investment performance, capital allocation priorities, and the broader economic cycle.
However, with such a low payout ratio, there’s no reason the company couldn’t increase dividends in the future. The firm’s focus on alternative investments, which often generate significant returns, suggests there’s potential for dividend expansion as long as earnings remain strong.
Dividend Safety
For income investors, the biggest concern is whether a company can maintain or grow its dividend even in difficult times. In KKR’s case, the numbers point to stability. The firm generates strong cash flow, and its dividend is well covered by earnings, reducing the likelihood of a cut.
That said, KKR’s business model does come with some risks. Because the firm relies heavily on investment gains, a prolonged market downturn could impact earnings, making dividend growth more uncertain. However, the company’s current financial position provides a cushion, and management has historically been conservative with dividend increases rather than overcommitting.
Chart Analysis
Price Action and Trend
KKR’s stock has been on a strong uptrend for most of the past year, with a steady rise that was well supported by the 50-day moving average (blue line). However, in recent weeks, the stock has broken below this moving average and is now trading near the 200-day moving average (purple line). This shift suggests that momentum has weakened, and the stock is entering a correction phase.
The decline has been sharp, with the stock dropping from its highs above $150 down to its current level of $115.27. This represents a notable pullback, and the fact that the price is now testing the 200-day moving average is critical. If this level holds, it could act as a support zone, but if the stock falls below it with strong selling pressure, it may signal further downside.
Volume Activity
Trading volume is an important indicator when analyzing price movements. The recent drop in price has been accompanied by relatively elevated volume, suggesting that investors are actively selling the stock. There was a particularly large volume spike in mid-July, which may have been related to earnings or another significant event, but recent trading shows steady distribution rather than aggressive accumulation.
If volume starts to decline while the stock stabilizes, it could indicate that selling pressure is easing. However, if volume picks up again on further downside moves, it could suggest that more investors are exiting their positions.
Moving Averages
The 50-day moving average has clearly turned downward, reflecting the short-term weakness in the stock. The longer-term 200-day moving average remains in an uptrend, which means the broader trend is still positive, but the stock is at a key inflection point.
When a stock drops below the 50-day moving average, it often signals the start of a deeper correction. The real concern is whether the 200-day moving average can hold as support. If the stock rebounds from this level, it may resume its long-term uptrend. If it breaks below, it could indicate a shift in sentiment, leading to further declines.
Relative Strength Index (RSI)
The RSI, shown at the bottom of the chart, has been trending downward and is now sitting in oversold territory. This suggests that the stock may be due for a short-term bounce or consolidation. When RSI drops below 30, it typically indicates that the stock is oversold and could attract buyers looking for a reversal.
However, an oversold RSI alone doesn’t guarantee a recovery. If the stock continues to decline despite being oversold, it could be a sign that momentum is too weak for a reversal. Investors often look for RSI to turn back upward as confirmation before stepping in.
Support and Resistance Levels
The key support level to watch is around the 200-day moving average, currently near $115. If the stock holds above this level, it may start to form a base and recover. If it breaks below, the next major support zone could be closer to $100, where the stock previously consolidated before its big run-up.
On the upside, resistance is likely around the 50-day moving average, which is now sloping downward. This means any rebound may struggle to break above that level unless there is strong buying interest.
Analyst Ratings
📈 Upgrades:
🔹 Goldman Sachs – On November 19, 2024, Goldman Sachs maintained its strong buy rating for KKR while raising the price target from $160 to $177. Analysts cited the firm’s solid investment pipeline, strong asset management performance, and capital deployment strategies as key factors for their bullish outlook.
🔹 Keefe, Bruyette & Woods – On October 25, 2024, this firm reiterated its buy rating, increasing the price target from $149 to $166. Analysts pointed to KKR’s expanding private credit business and robust deal flow as drivers for continued earnings growth.
📉 Downgrades:
🔻 HSBC – On January 30, 2025, HSBC downgraded KKR from a strong buy to a hold, even though they raised the price target from $153 to $173. Analysts expressed concerns over macroeconomic headwinds that could impact the alternative asset management industry, particularly rising interest rates and a slowdown in deal activity.
🔻 Morgan Stanley – On February 6, 2025, Morgan Stanley maintained its hold rating but made a slight downward revision to the price target, adjusting it from $157 to $156. The move suggests a neutral stance, reflecting uncertainty about near-term earnings momentum despite the company’s long-term growth potential.
📊 Consensus Price Target:
The average price target from analysts currently sits around $161.43, implying a potential upside of approximately 49.47% from recent trading levels. While sentiment remains generally positive, recent downgrades highlight concerns about broader economic conditions and their impact on KKR’s ability to sustain its high-growth trajectory.
Earning Report Summary
KKR & Co. Inc. wrapped up the fourth quarter of 2024 on a strong note, with solid earnings growth and an expanding asset base. The firm reported adjusted net income of $1.19 billion, or $1.32 per share, exceeding what analysts had expected. A big part of that came from a 25% increase in fee-related earnings, reaching $843 million. That’s a clear sign that KKR’s asset management business is running smoothly and delivering strong returns.
One of the standout metrics from this report was the firm’s total assets under management, which climbed 15% to hit $638 billion. KKR brought in $27 billion in new capital while deploying $23 billion into fresh investments. Management has set its sights on pushing past the $1 trillion AUM mark in the next five years, showing confidence in their ability to keep growing.
The firm was also active in building on some of its key investments. Over the quarter, KKR increased its stakes in USI Insurance Services, 1-800 Contacts, and Heartland Dental, putting an additional $1.1 billion to work. These investments are expected to drive earnings for KKR’s Strategic Holdings segment, with projections estimating around $350 million in added income next year.
Even with all these positive numbers, KKR’s stock took a hit after the earnings release, falling more than 7%. That might seem surprising given the strong financials, but sometimes market reactions don’t always align with company fundamentals. It’s possible that some investors decided to take profits, or broader market conditions played a role in the pullback.
Looking ahead, management remains upbeat about the firm’s future. They highlighted that fundraising efforts from individual investors helped KKR secure nearly $100 billion by the end of the year. That diversification in capital sources puts them in a strong position moving forward, especially as market conditions shift.
Overall, the latest earnings report paints a picture of a company that’s still growing, executing well, and positioning itself for long-term success. KKR continues to prove that it can navigate the ups and downs of the investment world while staying focused on creating long-term value.
Financial Health and Stability
Balance Sheet Strength
Financial health plays a big role in a company’s ability to sustain and grow dividends. KKR maintains a strong balance sheet, but it does have a significant amount of debt. With total cash holdings of $36.88 billion and total debt of $51.34 billion, the firm operates with a debt-to-equity ratio of 82.82%. While this is a relatively high level of leverage, it’s not unusual for investment firms that operate in private equity and alternative asset management.
Profitability and Cash Flow
KKR’s profitability remains strong, with an operating margin of 36.78%. The firm’s ability to generate substantial free cash flow—$6.65 billion in operating cash flow—helps support both its dividend and ongoing investment activities.
One important metric to watch is return on equity (ROE), which currently stands at 8.15%. While this isn’t an exceptionally high number compared to some other financial firms, it does indicate that KKR is effectively using shareholder capital.
Revenue and Earnings Trends
One potential area of concern is the recent drop in revenue. The company reported a 23.8% year-over-year decline in quarterly revenue. However, earnings per share (EPS) still managed to grow by 8.2%, which suggests that profitability remains intact despite the revenue decline.
Because KKR’s business depends heavily on investment cycles, revenue can be lumpy from quarter to quarter. Investors should be aware that this isn’t a company with stable, predictable earnings like a consumer staple or utility stock.
Valuation and Stock Performance
Valuation Metrics
KKR’s valuation has risen significantly over the past few years. The stock is currently trading at a trailing price-to-earnings (P/E) ratio of 32.98 and a forward P/E of 17.92. This suggests that analysts expect earnings to improve, making the stock look more reasonably priced relative to future earnings potential.
The price-to-book (P/B) ratio of 4.06 shows that investors are paying a premium for KKR’s assets, which is common for high-growth investment firms. Additionally, the PEG ratio of 0.50 suggests that the stock may be undervalued when factoring in its expected growth.
Stock Performance
KKR has had a volatile year, with a 52-week trading range between $91.92 and $170.40. The stock is currently sitting at $108.17, well below its highs. With a beta of 1.71, KKR is more volatile than the overall market, meaning it tends to experience larger price swings.
The fact that the stock is trading below both its 50-day moving average ($145.33) and its 200-day moving average ($131.71) suggests a bearish trend in the near term. However, for long-term investors, volatility can create opportunities if the stock dips to an attractive entry point.
Risks and Considerations
- Cyclical Business Model – KKR’s earnings are highly dependent on market cycles, which can lead to revenue fluctuations.
- Leverage and Debt Levels – While manageable, KKR carries a significant amount of debt, and rising interest rates could increase borrowing costs.
- Low Dividend Yield – Investors looking for high-yield income may find better options elsewhere.
- Stock Price Volatility – With a high beta, KKR’s share price can swing more than the broader market.
- Regulatory Risks – Any changes in tax laws or private equity regulations could impact KKR’s ability to generate profits.
Final Thoughts
KKR isn’t your typical dividend stock, but it does have a lot to offer for the right type of investor. The yield is relatively low at 0.65%, which means income-focused investors may want to look elsewhere for higher payouts. However, the company’s strong financial health, disciplined capital allocation, and potential for dividend growth make it an intriguing choice for those willing to ride out market cycles.
For investors seeking stability and consistent dividend hikes, KKR may not be the best fit. But for those who value a mix of capital appreciation and measured dividend payouts, this investment firm offers a unique opportunity in the world of alternative asset management.
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