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24/7 Wall St. Insights
- Quality ultra-high-yield stocks offer passive income investors streams of revenue.
- High dividend stocks could explode higher as rates fall.
- Also: 2 Dividend Legends to Hold Forever
Investors love dividend stocks, especially the ultra-high-yield variety, because they offer a significant income stream and massive total return potential. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
One stumbling block for some investors is the risk of owning companies that pay ultra-high yields. Some believe the higher the dividend, the higher the risk profile; in some cases, that is correct. However, some companies with big payouts have been in business for years, and investors with a higher risk tolerance have accumulated an ocean of passive income from them.
Typically, real estate investment trusts, energy master limited partnerships, business development companies, and closed-end funds are among the investment vehicles that pay ultra-high yields. We decided to screen that list, looking for a gold-standard winner and found one that remains cheap and pays a stunning 13.82% dividend quarterly, with a special dividend contributing to the total.
Investors looking for incredible dividend ideas should take advantage of this free dividend legends report today.
Kohlberg Kravis Roberts
This global investment firm specializes in private equity and leveraged buyouts.
Founded by three former Bear Stearns employees in 1976, KKR & Co. ( NYSE: KKR ) became a Wall Street legend. The firm's website chronicles its beginning:
On May 1, 1976, Henry Kravis and George Roberts co-founded KKR alongside their mentor Jerome Kohlberg with $120,000, launching what we now know as the alternatives industry. Initially only a U.S.-focused private equity firm, today we are global, with multiple types of capital that we invest all over the world on behalf of our clients, and those investments are helping address some of the world's most pressing challenges. First cousins and the closest of friends, the bond of partnership between Henry and George, and their entrepreneurial spirit are embedded in our firm’s DNA.
50 Years of Triumph and Success
From humble origins to Wall Street titan.
Since its founding, KKR has redefined alternative asset management and has become one of the largest and most successful firms in Wall Street's history. In 2018, the company converted from a limited partnership to a corporation and, by 2024, officially joined the venerable S&P 500, capping close to 50 years since the founders drew up plans in a small restaurant.
What Is FS KKR Capital
A business development company with a huge dividend.
This is a well-known name on Wall Street, offers a solid entry point at current levels, and pays a staggering 13.82% dividend. FS KKR Capital Corp. ( NASDAQ: FSK ) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.
The company also seeks to invest in:
- First-lien senior secured loans
- Second-lien secured loans
- Subordinated loans
- Mezzanine loans
The firm also receives equity interests in connection with debt investments, such as warrants or options for additional consideration. It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.
The fund's investment approach is cautious and strategic. It may invest opportunistically in corporate bonds and similar debt securities, but it does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. It aims to invest in small and middle-market companies in the United States, ensuring a secure investment for potential investors.
Why Invest in FS KKR Capitol?
A potential total return home run for passive income investors.
On the company's website, they note this critical information for potential investors:
KKR Credit is a subsidiary of KKR & Co. Inc. This leading global investment firm manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, and credit, with strategic manager partnerships that manage hedge funds.
KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. It invests its capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business.
KKR Credit Advisors and FS Investments are partners in FS/KKR Advisor, LLC, which advises FS KKR Capital Corp. So, while not directly owned by the Wall Street behemoth, a subsidiary of the company in partnership runs FS KKR. You can bet that those in KKR Credit are among the most brilliant minds on Wall Street, and you also surmise that the potential for advice and corporate funding deals are often exchanged.
This is a potential total return home run for passive income investors seeking dependable ultra-high yield dividends. While better suited for growth and income investors with a higher risk tolerance, this outstanding company makes sense now, especially with the potential for lower interest rates in the future.
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