Should KKR & Co LP (NYSE:KKR) Be Part Of Your Portfolio?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 8 years, KKR & Co LP (NYSE:KKR) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Does KKR tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for KKR

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

NYSE:KKR Historical Dividend Yield June 26th 18

How well does KKR fit our criteria?

The company currently pays out 36.07% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 27.09%, leading to a dividend yield of around 2.41%.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view KKR as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, KKR produces a yield of 2.74%, which is on the low-side for Capital Markets stocks.

Next Steps:

Taking all the above into account, KKR is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three fundamental factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for KKR’s future growth? Take a look at our free research report of analyst consensus for KKR’s outlook.

2. Valuation: What is KKR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KKR is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.