3 Ultra-High-Yield Lenders Paying Over 13%: Which Payouts Hold Up?

Business development companies (BDCs) lend to midsize private businesses that are too small to tap the bond market. To avoid corporate income tax, they have to pass most of their taxable income through to shareholders, so their yields sit well above almost everything else on the income menu. In this group of three large lenders, even the lowest yield is 13.1%. A yield that high usually signals the market doubts the payout will last, so this bundle prioritizes safety. For each name, we look at how well net investment income (NII) covers the dividend, how many loans have stopped paying, and where the stock trades against book value.

FS KKR Capital: A 21.3% Yield Flashing Warning Lights

FS KKR Capital (NYSE:FSK | FSK Price Prediction) yields 21.3%, the highest of the three. Read that number as a warning before you read it as an opportunity. When a lender’s yield goes above 20%, the share price is usually telling you the market expects more trouble. The payout history supports that reading. FS KKR paid $0.70 in each quarter of 2025. In 2026, the payments fell to $0.48, $0.42, and $0.44. The trailing 12-month total is $2.04, compared with an annualized forward figure of $1.76.

Coverage: Second-quarter NII came in at $0.44 per share, exactly matching the $0.44 third-quarter distribution. An outside factor helped that match: KKR is giving up 50% of its subordinated income incentive fee for four quarters starting in Q2. Before the cut and the waiver, first-quarter adjusted EPS of $0.41 did not cover the $0.48 distribution. The company also said it may pay distributions from sources other than NII.

The trailing EPS of -1.41 is the second warning sign. GAAP earnings include realized and unrealized losses on the loan book. In the first quarter alone, FS KKR posted a GAAP loss of $1.57 per share on $558 million in net losses, with another $154 million in Q2. Negative earnings mean the loan book is losing value faster than interest income can replace it. A smaller asset base produces less NII in future quarters, which is the money that pays your dividend.

Credit and book value: Nonaccruals (loans that have stopped paying) improved to 3.8% of the portfolio at fair value from 4.2%, but they are still 7.1% at amortized cost. Debt-to-equity fell to 127% from 138%, putting it back within the target range. The stock trades around $10.44 against a NAV of $18.30, and NAV was $20.89 at the end of 2025. Shares are down 20.19% year to date.

Bull case: KKR has committed its own capital. It bought $150 million of convertible preferred stock and completed a $150 million tender offer at $11.00 per share. FS KKR has also repurchased about 3.7 million shares at roughly $10.73, well below NAV. In the Q2 release, CEO Michael C. Forman said FSK “reduced net leverage to within our target range, and made progress reducing our non-accrual assets.”

Risk: The fee waiver is temporary, and the portfolio is shrinking. Q2 sales and repayments totaled $1.33 billion against $590 million in purchases. When the waiver ends, a smaller book must cover the payout on its own.

Blue Owl Capital Corporation: A Reset Dividend With Room to Spare

Blue Owl Capital Corporation (NYSE:OBDC) yields 14.4%. Management cut the base dividend to $0.31 from $0.37 to match the company’s go-forward earnings power, and it still pays occasional supplementals. The latest supplemental was $0.02, paid 2026-09-15. The annualized forward amount of $1.24 is below the trailing total of $1.38, so budget your income around the lower base.

Coverage: The adjustment is working. Second-quarter adjusted NII of $0.34 beat the $0.32 consensus and covered the $0.31 base with room for a supplemental. In the first quarter, by contrast, NII of $0.31 fell short of the old $0.37 base. CEO Craig W. Packer pointed to “a 9.6% annualized return on adjusted net investment income and healthy dividend coverage.”

Credit and book value: Nonaccruals rose to 2.8% of the portfolio at cost, up from 2.0%. The balance sheet is the best part of the story. Net debt-to-equity is 1.11x, a two-year low. Moody’s upgraded the company to Baa2 in January, and it issued $800 million of unsecured debt in Q2. The $14.96 billion portfolio spans 229 companies. The stock trades near $10.06 against a NAV of $14.26, and management has bought back about $35 million of stock in each of the past two quarters. Sentiment around the wider Blue Owl platform is still weak: the Wall Street Journal recently reported that the company’s share price hasn’t budged despite its founders’ promise of a comeback.

Bull case: An investment-grade rating, low leverage, and a base dividend that fits current earnings make this the clearest coverage story of the three. Shares are down 11.28% year-to-date, so the discount to book is wider than it was in January.

Risk: Earning power is under pressure. New commitments are yielding 8.7%, down from 9.7% a year ago, and Q2 repayments of $747 million far topped financings of $219 million.

Blackstone Secured Lending Fund: Best Loan Book, Thinnest Cushion

Blackstone Secured Lending Fund (NYSE:BXSL) yields 13.1%, and it has the steadiest payout record in this group. It has paid $0.77 every quarter from the 2023-09-28 ex-dividend date through 2026-09-30, and the latest payment is scheduled for 2026-10-23, which is today.

Coverage: This is the weak spot. Second-quarter NII of $0.75 covered 97% of the dividend. Coverage has slipped each quarter, from 106% to 104% to 100% to its current level, while NII per share fell from $0.82 as base rates came down.

Credit and book value: The portfolio is the highest quality of the three. It is 96.8% first-lien senior secured and 96.3% floating rate, and 93.2% of income comes from cash interest. Nonaccruals are 1.8% at fair value and 3.6% at amortized cost, up from historically low levels. The all-in cost of debt is 5.05%, and the fund issued $650 million of 2031 notes and $400 million of 2029 notes. Moody’s rates it Baa2 with a negative outlook. The stock trades near $23.76 against a NAV of $25.53, the smallest discount to book in this group. NAV was $27.33 a year ago.

The bull case: the market believes this book more than the others. Shares are up 1.92% over the past year while FS KKR and Blue Owl fell by double digits. Brad Marshall said the fund had “no new assets placed on non-accrual” in Q2, and that the portfolio is “underpinned by stable EBITDA growth across our borrowers.”

Risk: If rates keep falling, NII will probably keep drifting lower. Two more quarters below full coverage would put pressure on the board to cut the $0.77 payout.

Which Over-13% Payout Holds Up Best

Blue Owl’s adjustment-based dividend of $0.31 looks like the most durable of the three. It is covered by $0.34 of adjusted NII, backed by the company’s lowest leverage in two years, plus an investment-grade rating. Blackstone Secured Lending has the clearest loan book, but at 97% coverage, its long-steady payout leaves little room for error. FS KKR pays the biggest check, and its 21.3% yield, negative trailing EPS, and temporary fee waiver all point to it being the least secure of the three (the same cluster of red flags we broke down in a free guide to spotting dividend traps before the cut).

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