Investor Alert

Feb. 9, 2017, 7:13 a.m. EST

KKR profit up on investment gains, to raise div

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By Matthew Jarzemsky

KKR & Co. reported a higher fourth-quarter profit on investment gains, and said it would raise its dividend and buy back more stock.

For the period ended Dec. 31, the New York private-equity firm's earnings increased to $171 million, or 35 cents a share, from $32.3 million, or 7 cents a share, the same period a year earlier.

Economic net income, a closely watched performance measure that reflects changes in the value of the firm's portfolio, rose to $339.2 million, or 40 cents a share, from $70.5 million, or 8 cents a share, in the year-earlier period. The latest result edged out the 39-cent average estimate of analysts in a FactSet poll.

KKR benefited from a 2.8% gain on its balance-sheet investments, which compared favorably with losses on energy and credit bets in the year-earlier period. The firm, like other asset managers, predominantly manages money for pensions' and other institutions' money for fees. But KKR also uses its balance sheet -- the largest among its peers -- to bet its own capital on companies, debt and other assets.

The firm said it would increase its dividend by a penny to 17 cents a share, starting with its payout for the current quarter. In late 2015, KKR declared a fixed quarterly dividend, a departure from the industry standard of payouts that rise and fall with cash profits for a given period.

KKR also said it plans to buy back another $250 million shares, adding to a $500 million share repurchase program it announced in 2015.

The firm's private equity holdings appreciated 3.4%, trailing gains in the portfolios of rivals Blackstone Group LP, Carlyle Group LP and Apollo Global Management LLC. Shares of First Data Corp., which went public in 2015 but remains KKR's largest holding, gained 7.8% during the period. Specialty insurance provider WMIH Corp.'s shares fell 34%.

KKR managed $129.6 billion as of Dec. 31, versus $119.5 billion a year earlier and $131.1 billion at the end of the prior quarter.

KKR's stock closed Wednesday at $18.37, up 19% year-to-date and 42% the past year amid a broad rally in financial firms' shares.

Write to Matthew Jarzemsky at matthew.jarzemsky@wsj.com

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