Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

May 18, 2011 - Kohlberg Kravis Roberts & Co. (KKR-NYSE) is a private equity firm specializing in acquisitions, leveraged buyouts, management buyouts, and mezzanine investments in large cap companies. The firm will consider investments in all industries globally, with a focus on infrastructure. It seeks a board seat in its portfolio companies.

KKR was featured last November. It was trading at $12 then. It's up 37% since. And the dividend is higher as well. Yet the valuations are still relatively low. This stock deserves more attention from all types of investors, but especially ones looking for income.

The dividend last year was 39 cents. This year, the company is scheduled to pay out 50 cents...in the first 2 quarters. The March payment was made. It was 29 cents. The June quarter will be 21 cents. Compare that to last year's first 2 payments: 8 cents and 8 cents each. What will the distribution be for the last 2 quarters? Current estimates are for 84 cents for the year, but that's just for now. And it's only 29% of earnings. If results are as robust as anlaysts' suggest, expect that payout to increase.

All pistons are firing here. Portfolio companies are benefitting from a better economy, showing improved revenues and earnings as well as higher valuations. The IPO market has opened up for KKR to exit some of its portfolio holdings at good profits. Also helping: Lower interest rates that give KKR better terms and longer maturities to refinance or extend debt.

Management is expanding, globally and into new markets. China, India and Vietnam are only 3 of the countries where KKR is spending more time, money and effort. There's also more emphasis on real estate. Furthermore, the company just raised a new North America fund to exploit the current opportunities in these economies that are just beginning to show signs of real recovery.

Money is one thing management doesn't need to worry about. There's $1.1 billion in cash plus borrowing capacity of $2.1 billion. Management stated that's enough to carry out its business plan. It just bought the German telecommunications company Versatel for $342 million.

Essential numbers: Market Cap is $3.71 billion. Trailing P/E is 9.41 while Forward P/E is 7.05. Price to sales is 7.41. Price to book is 2.56. Book value is $6.75. Return on equity for the last 12 months was 22.69%. Return on assets was 21.24%. Revenues were $504.67 million. Total cash per share is $4.84. Total debt is $1.54 billion. Total Debt to Equity is 5%. Current ratio is 1.66. The stock has doubled from its low of $8.64 of last year, shortly after it went public in July of 2010. There are 216.32 million shares Outstanding with a Float of 196.61 million. Insiders own 2.44%. Institutions have 65.80% of the Float.

Analysts have a wide range of estimates for this year's earnings (from $2.12 to $2.87....consensus is $2.53). Last year, they were $2.83. For next year, the analysts have a range between $1.84 to $2.70. Obviously much depends on whether the IPO market stays open and interest rates stay low. If management can't exit portfolio companies or interest rates move higher, some of the profits expected won't materialize.

Income investors looking for growth will find KKR an interesting stock. It has the potential for both. But be aware of volatile earnings as the company needs a continuing global economic recovery and a strong stock market to maximize its returns.