FS KKR Capital

FSK

Market cap $4.09B

I trimmed positions in NVDA and AMD due to valuation concerns and overexposure, favoring BDCs like ARCC, OBDC, and HTGC for yield. November dividend income reached a record $653, up 5% Y/Y, with BDCs now comprising 33% of total dividends despite potential sector-wide dividend cuts. My 2025 target is $11,000 in annual net dividends (8% growth), with flexibility to raise capital for real estate or travel if opportunities arise.

FS KKR Capital Corp trades at a steep 32% discount to NAV, offering a compelling risk-adjusted entry point. The ~19% yield is compelling, but even as a FSK bull, I have to admit that these are one of the last days (quarters) when we see it this high. If we assume a massive 40% cut, we would still be getting material current income streams.

FS KKR Capital is cutting its base cash dividend by 29.7% to $0.45 per share, with the BDC's yield now the largest versus its large-cap peers. The move comes as NAV per share grew marginally during the third quarter by 6 cents sequentially, against what's been a broader decline since 2023. FSK is trading at a material 34% discount to NAV, with the move to reduce its dividend set to be helpful to drive a recovery and a possible discount narrowing.

The market looks very overvalued today. However, there is a corner of it that appears largely overlooked. I detail why I am pouring a large percentage of my portfolio into this golden buying opportunity.

This Is How I'm Harvesting BDC Cash Flows For My Retirement. The double-digit yields, term 'private credit,' cases like First Brands and Tricolor are just some examples that introduce a high degree of skepticism. However, if done right, BDCs can bring a lot of value to the table for safe passive income investors.

BDCs face earnings pressure from lower base rates, but fears of severe dividend cuts are overstated. Quite many BDCs have several levers to pull in order to absorb ~100 bps of base rate cuts without touching their dividends. Yet, I would say that the non-accrual risk is understated.

Agency mortgage REITs duel to the dividend cut. There are 7 facing off. The top 3 are much better than the other 4. Valuations are important and awful. Deal with it.

The market seems to question the true fair value of BDC portfolios. There is a fear that the BDCs will start to report elevated non-accruals, which would make their life more difficult (as they have already a lower interest rate problem at hand). For durable and high-yield income investors this has created a truly enticing and timely opportunity, which simply has to be explored given the direction of overall asset yields.

When your account size grows, so does your earning potential. With a total cash account of $200,000, you can invest $50,000 in four stocks or exchange traded funds (ETFs) and possibly collect $50,000 worth of annual passive income.

There is a major market disconnect in which there are blue-chip dividend payers offering 11%+ yields right now, despite posting strong fundamentals. I discuss why the market is bearish on these stocks and why I think the fears are overblown. I also share two high-yield stocks that I think are attractive buys at current pricing.