Dividend-paying stocks are popular with income investors for good reason.
Fidelity notes that dividends can provide “portfolio ballast” regardless of market direction, delivering income whether the broader market is rising or falling.
That appeal is why Blue Owl Capital (OWL) has drawn so much attention lately. Its dividend yield has shot past 11%, making it one of the highest-yielding names in the alternative asset management space.
The problem? OWL stock has cratered. And with every new headline about private credit chaos, more investors are asking the same question: Is this dividend stock actually safe?
Blue Owl’s dividend stock ratios
Before diving into the crisis, here’s a snapshot of key dividend metrics for OWL as of April 2026:
- Annual dividend: $0.92 per share
- Dividend yield: ~11%
- Payout ratio: 107%–108% for 2025 (above 100%, meaning it exceeds reported earnings)
- Target payout ratio: ~85% (management’s stated goal over the next few years)
- Fee-related earnings (FRE) per share: $0.96 for full-year 2025 (up 12% year-over-year)
- Distributable earnings (DE) per share: $0.84 for full-year 2025
- Dividend coverage: DE of $0.84 vs. dividend of $0.90
The payout ratio above 100% is the number that will make investors nervous. It means that Blue Owl is paying out more than it earns per share, at least by traditional accounting metrics.
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Management has been clear that bringing the ratio down to 85% is a priority but that’s going to take time.
Blue Owl stock is down 66% from all-time highs
Blue Owl grew from zero to over $300 billion in assets under management in less than 10 years.
It was one of the hottest names in alternative asset management before things started to unravel.
The initial blow came from fears of artificial intelligence. Concerns about AI disrupting software companies rattled private credit investors, as software loans make up a meaningful portion of many direct-lending portfolios.
Evercore ISI noted that two of Blue Owl’s private credit funds were capping redemptions at 5% after receiving withdrawal requests of 21.9% and 40.7%, figures it described as undeniably large.
Investors asked to pull roughly $5.4 billion from Blue Owl’s flagship Credit Income Corp (OCIC) fund and its tech-focused OTIC fund in the first quarter of 2026.
That is a meaningful signal of fear, even if the underlying loans tell a different story.
Related: Blue Owl private credit fund raises $20.7M in share sale
Moody’s piled on, cutting its outlook on the $36 billion OCIC fund to “negative” from “stable,” citing elevated redemptions and a concentrated equity-holder base.
It warned that high redemptions could persist and further slow inflows, potentially eroding currently strong liquidity.
Then there’s the stock itself. OWL shares have lost more than 66% from their all-time highs, raising the dividend yield to 11%.
Blue Owl remains optimistic
While the headlines have been brutal, Blue Owl’s Co-CEO Marc Lipschultz pushed back hard on the narrative during the firm’s Q4 earnings call.
His argument, in short: don’t confuse stock price panic with credit reality.
- In direct lending, Blue Owl’s average loan-to-value ratio is around 40%, meaning there’s a 60% equity cushion before it’d take a loss.
- The average borrower in their portfolio was delivering high single-digit revenue growth and low-teens EBITDA growth through the fourth quarter.
- Non-accruals remain near zero, and the firm’s annualized net loss rate over the past decade has been just eight basis points.
On the software concern specifically, Lipschultz noted that tech portfolio companies have grown revenue by nearly 40% and EBITDA by nearly 50% since ChatGPT launched in late 2022.
Software represents just 8% of total assets under management across Blue Owl’s funds.
Evercore ISI maintained its Outperform rating, saying the earnings impact from the redemptions is materially more modest than the headlines imply, noting that the affected funds represent just 12.5% of fee-paying AUM and that the cap implies less than 2.5% annualized outflows.
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Piper Sandler trimmed its price target on OWL to $12.50 from $15. Still, the firm kept an Overweight rating, saying downside scenarios may already be reflected in current valuation, a view echoed by Bank of America.
Of 13 Wall Street analysts covering OWL stock, the consensus rating remains bullish, with a median 12-month price target of $13.88, implying significant upside from current levels.
Is the 11% dividend yield sustainable?
The short answer: the dividend is under pressure, but not obviously at the point of being cut.
Management is locked into a fixed annual dividend of $0.92 for 2026, payable quarterly at $0.23 per share. That commitment is meaningful.
Blue Owl Co-CEO Doug Ostrover said at the Bank of America Financial Services Conference in February that the firm is “laser-focused” on growing FRE per share.
Ann Dai, the Managing Director at Blue Owl, stated:
“We declared a dividend of $0.225 per share for the fourth quarter payable on March 2 to holders of record as of February 20, and we also announced an annual fixed dividend of $0.92 for 2026, or $0.23 per quarter, starting with our first quarter 2026 earnings.”
Alan Kirshenbaum, the CFO, acknowledged the firm is behind its Investor Day targets, but expects modest FRE per share growth in 2026 and an acceleration in 2027.
The payout ratio above 100% does bear watching.
- A dividend stock paying out more than it earns has a limited runway to sustain that pace without growth.
- Blue Owl’s path back to a healthier ratio runs through better fundraising, especially in the private wealth channel, which the firm expects to stabilize in the second half of 2026.
- The digital infrastructure and asset-backed finance businesses remain bright spots. Blue Owl’s net lease strategy delivered gross returns of over 13% in 2025.
- Its alternative credit fund returned 16.6% gross for the year.
- The 11% yield on this dividend stock is elevated because the market is pricing in serious risk.
Whether that risk materializes depends largely on whether private credit sentiment stabilizes and on whether Blue Owl’s underlying portfolio performance continues to diverge from the grim narrative.
For income investors comfortable with that uncertainty, the yield is real, and the dividend is currently intact.
For those who need certainty, the payout ratio and the redemption headlines are hard to ignore.
Related: Schwab warns private credit investors
