Dividend yields

KKR & Company (KKR) rewards its shareholders through share dividends and repurchases. As of October 2016, the company bought back 31.5 million common units for $457 million of its announced $500 million share repurchase program in December 2015.

In addition, 5.2 million granted equity awards valued at $79 million were canceled to satisfy tax obligations in connection with vesting. In total, 36.7 million common units have been retired on a fully diluted basis since October 2015.

KKR Maintains Dividends, Continues with Repurchases in 3Q

KKR continues with its fixed dividend policy of $0.16 per common share. Prior to the current dividend policy, the company distributed 75%–80% of its distributable earnings at an annualized yield of ~8%.

The company intends to retain more cash on its balance sheet by offering fixed and lower dividends. The current dividend yield stands at 4%.

New policy augments cash levels

KKR intends to generate a higher return on retained cash by investing in profitable opportunities and leveraging on its scale of resources. The company’s employees and senior management hold ~45% of the company’s shares. With a balance sheet of $13.5 billion on September 30, 2016, its annualized distribution yield now stands at 4%.

KKR’s competitors have the following returns on equity:

  • Apollo Global Management (APO): 3.1%
  • Carlyle Group (CG): 13.9%
  • Blackstone Group (BX): 28%

Together, these companies make up 4.3% of the PowerShares Global Listed Private Equity ETF (PSP).

KKR has managed to generate a compound annual return of 13% on its book value over the past six years, reflecting a higher than opportunity rate of return. The company believes that it can provide a better return to its investors than they can generate themselves. The company can also deploy more resources toward its buyback program as it believes the stock to be undervalued at current levels.

Continue to the next and final part of this series for a look at KKR’s evaluations.

Latest articles

19 Jul

Barrick Gold Reaches Deal to Buy Acacia Mining

WRITTEN BY Anuradha Garg

After a long standoff, Barrick Gold (GOLD) and Acacia Mining (ABGLF) have reached an agreement.

19 Jul

Comcast Shares Pop on Goldman's Optimism

WRITTEN BY Ruchi Gupta

Comcast (CMCSA) shares popped after Goldman Sachs issued a positive note on the company recently. Goldman upgraded its rating for Comcast to "buy" from "hold."

19 Jul

Why Analysts Are Bearish on Netflix Stock

WRITTEN BY Aditya Raghunath

Netflix stock fell over 10.0% on Thursday and is down 0.5% today as well.

On Thursday, pet retailer Chewy (CHWY) reported its first-quarter results after the market closed. The company reported its earnings for the first time.

Kenya’s Safaricom and South Africa’s Vodacom want to team up to purchase M-Pesa rights from Vodafone (VOD).

Cleveland-Cliffs (CLF) released its second-quarter results today before the markets opened.