FS KKR Capital sets 10% dividend yield target for 2026 amid expanding M&A pipeline and changes in base distribution.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 06 2025
0mins
Should l Buy FSK?
Source: SeekingAlpha
Management Insights: FS KKR Capital Corp's Q3 2025 earnings call highlighted the company's resilience in navigating market volatility, with net investment income of $0.57 per share and an increase in net asset value to $21.99. A forward dividend strategy was announced, projecting a 10% yield on net asset value for 2026.
Financial Performance: The company reported total investment income of $373 million for Q3, a decrease from the previous quarter, with total expenses down to $210 million. The investment portfolio's fair value stood at $13.4 billion, with a focus on senior secured loans.
Outlook and Guidance: FSK anticipates a decline in net investment income to approximately $0.51 per share for Q4 2025, with a base distribution of $0.45 per share expected in Q1 2026. Management emphasized the importance of monitoring interest rates and refinancing activities for future distributions.
Analyst Sentiment: Analysts expressed concerns regarding legacy asset exits and dividend sustainability, while management maintained a confident outlook, focusing on portfolio resilience and strategic flexibility in response to market changes.
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Analyst Views on FSK
Wall Street analysts forecast FSK stock price to rise
6 Analyst Rating
0 Buy
6 Hold
0 Sell
Hold
Current: 13.460
Low
15.50
Averages
17.25
High
18.50
Current: 13.460
Low
15.50
Averages
17.25
High
18.50
About FSK
FS KKR Capital Corp. is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company. The Company is focused on providing customized credit solutions to private middle market United States companies. Its investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. Its portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle market United States companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private United States companies. It may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the over-the-counter market or directly from its target companies as primary market or directly originated investments. The Company is managed by FS/KKR Advisor, LLC.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Rising Default Risks: UBS Group has warned that in an aggressive disruption scenario, default rates in U.S. private credit could rise to 13%, significantly higher than the projected stress for leveraged loans and high-yield bonds, estimated at 8% and 4%, respectively.
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- Opportunities in Business Development Companies: This situation may present investment opportunities in business development companies that hold the debt of affected firms.
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- Market Growth: The private credit market, valued at approximately $2 trillion in 2020, is projected to grow by 50% by early 2025 and could reach nearly $5 trillion by 2029, indicating rapid industry expansion but also inherent risks.
- Credit Risk Warnings: Jeffery Gundlach, CEO of DoubleLine Capital, cautioned that some private credit firms are making 'garbage loans,' while Goldman Sachs CEO Jamie Dimon highlighted overly lenient direct lending standards, suggesting potential credit issues ahead that investors should be wary of.
- Diverse BDC Performance: Prospect Capital's net asset value has significantly eroded, and despite its attractive 19.7% forward dividend yield, its reliance on issuing perpetual preferred stock to raise capital increases fixed payment obligations, potentially jeopardizing the reliability of common stock dividends.
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- Conference Call Timing: The company will host a conference call on February 26, 2026, at 9:00 a.m. (Eastern Time) for its earnings report, allowing all interested parties to participate via the company’s website, enhancing investor engagement.
- Registration Requirements: Research analysts are required to register a day in advance or at least 15 minutes before the call starts to ensure participation, which aims to improve the organization and efficiency of the meeting.
- Investor Presentation: A financial information presentation will be available on the company’s website after the market close on February 25, 2026, further supporting investors' understanding and analysis of the company's financial status.
See More
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- Conference Call Timing: The company will host a conference call on February 26, 2026, at 9:00 a.m. ET, inviting all interested parties to participate, which aims to enhance investor engagement and information access.
- Registration Requirements: Research analysts are required to register a day in advance or at least 15 minutes before the call starts, reflecting the company's emphasis on professional investor participation.
- Investor Presentation Availability: A financial information presentation will be available post-earnings release, further enhancing the transparency and interaction between the company and its investors.
See More
Private Credit Markets Face AI Disruption Risks
- Increased Pressure on Software Sector: The introduction of new AI tools by Anthropic has triggered a sell-off in software data provider shares, intensifying uncertainty in the private credit market, particularly regarding lending risks to software companies.
- Decline in Asset Management Stocks: Ares Management fell over 12%, Blue Owl Capital dropped more than 8%, and KKR and TPG saw declines of nearly 10% and 7%, respectively, reflecting investor concerns about AI's potential impact on cash flows and default risks.
- Rising Default Risks: UBS Group has warned that in an aggressive disruption scenario, default rates in U.S. private credit could rise to 13%, significantly higher than the projected stress for leveraged loans and high-yield bonds, estimated at 8% and 4%, respectively.
- Liquidity Issues Intensified: Although strains in private credit predate AI concerns, Jeffrey C. Hooke noted that existing liquidity and loan extension issues have been exacerbated by recent developments, adding new challenges to an already pressured sector.
See More
The Impact of Software Concerns on Private Credit and Recommended BDC Stocks to Consider
- Private Credit Sector: The emergence of private credit "cockroaches" indicates a shift in the market, particularly affecting the software sector.
- Investment Opportunities: This situation may present new investment opportunities in shares of business development companies that hold the debt of these affected companies.
See More
The Impact of Software Concerns on BDC Stocks: Reasons Some May Be Good Investment Opportunities
- Private Credit Sector: The private credit sector is facing challenges, likened to "cockroaches" emerging from the software industry.
- Opportunities in Business Development Companies: This situation may present investment opportunities in business development companies that hold the debt of affected firms.
See More
Private Credit Market Growth and Risks Coexist
- Market Growth: The private credit market, valued at approximately $2 trillion in 2020, is projected to grow by 50% by early 2025 and could reach nearly $5 trillion by 2029, indicating rapid industry expansion but also inherent risks.
- Credit Risk Warnings: Jeffery Gundlach, CEO of DoubleLine Capital, cautioned that some private credit firms are making 'garbage loans,' while Goldman Sachs CEO Jamie Dimon highlighted overly lenient direct lending standards, suggesting potential credit issues ahead that investors should be wary of.
- Diverse BDC Performance: Prospect Capital's net asset value has significantly eroded, and despite its attractive 19.7% forward dividend yield, its reliance on issuing perpetual preferred stock to raise capital increases fixed payment obligations, potentially jeopardizing the reliability of common stock dividends.
- Quality Investment Opportunities: Ares Capital boasts a portfolio with 61% in first-lien secured loans and a low non-accrual rate of 1.8%, well below industry averages, showcasing its resilience in uncertain market conditions and positioning it as a prime investment choice for cautious investors.
See More
FS KKR Capital Corp to Release 2025 Financial Results on February 25, 2026
- Earnings Release Schedule: FS KKR Capital Corp plans to release its fourth quarter and full year 2025 financial results after the market close on February 25, 2026, which is expected to provide investors with critical financial data and future outlook.
- Conference Call Timing: The company will host a conference call on February 26, 2026, at 9:00 a.m. (Eastern Time) for its earnings report, allowing all interested parties to participate via the company’s website, enhancing investor engagement.
- Registration Requirements: Research analysts are required to register a day in advance or at least 15 minutes before the call starts to ensure participation, which aims to improve the organization and efficiency of the meeting.
- Investor Presentation: A financial information presentation will be available on the company’s website after the market close on February 25, 2026, further supporting investors' understanding and analysis of the company's financial status.
See More
FS KKR Capital Corp. Schedules Q4 2025 Earnings Release and Conference Call
- Earnings Release Schedule: FS KKR Capital Corp. plans to release its Q4 and full year 2025 financial results after market close on February 25, 2026, demonstrating the company's commitment to transparency and investor communication.
- Conference Call Timing: The company will host a conference call on February 26, 2026, at 9:00 a.m. ET, inviting all interested parties to participate, which aims to enhance investor engagement and information access.
- Registration Requirements: Research analysts are required to register a day in advance or at least 15 minutes before the call starts, reflecting the company's emphasis on professional investor participation.
- Investor Presentation Availability: A financial information presentation will be available post-earnings release, further enhancing the transparency and interaction between the company and its investors.
See More
