In this post-financial-crisis world, banking regulators across the globe have tightened the screws on the types of loans that banks can make and how much risk they can take. That means tighter capital requirements, which force banks to rein in lending to small and midsize businesses with less-than-sterling balance sheets, and to sell off less-desirable loans.

But, fortunately for businesses that need credit, someone is always willing to fill the breach when there’s a buck to be made.

Private-equity (PE) firms have stepped in to fill the funding gap. KKR, best known for its $31 billion takeover of RJR Nabisco in 1988 (chronicled in the best seller Barbarians at the Gate), has been particularly adept at developing bank-like businesses.

KKR is a complex business, but for income investors, here’s the bottom line: Analysts predict, on average, that it should make total distributions of $1.82 in 2014, maintaining a nearly 8% yield. And that distribution is expected to rise to about $2 next year.

Formed in the late 1970s to engineer management buyouts, KKR essentially pioneered the business of buying equity or debt in non-public companies. Given its history of innovation, it’s no surprise that KKR is remaking the PE industry today, branching out into the roles of adviser, underwriter and direct lender. So now it doesn’t just collect large, one-time payments when it cashes out of a deal, but it also collects management, syndication and incentive fees.

KKR still holds stakes in more than 90 companies generating $200 billion in annual revenue through its PE business, which accounts for more than $53 billion of assets. But it has another $50 billion of assets devoted to loans made directly to borrowers without intermediaries.

In the second quarter, KKR completed its acquisition of KKR Financial Holdings, a specialty finance company managed by KKR that focuses on direct investment. The deal increased KKR’s book value to $98 billion, added greater liquidity to its balance sheet and provided more capital to fund future growth. It will also boost KKR’s recurring distributions to its unit holders.

Good Balance

In addition to having a diversified and increasingly bank-like business model, KKR has an attractive balance sheet. PE firms typically raise most of their money from outside investors, such as pension funds and other large institutions. But KKR has lots of cash on its -balance sheet, and so can use large sums of its own money alongside its investors’. Because partnering with other PE firms on deals is not a necessity, KKR is able to generate better returns for -itself.

In fact, because it puts more of its own funds on the line, KKR’s total distributable earnings are typically twice those of its peers, resulting in a much higher yield for investors. KKR’s distributions are made up of three components: balance-sheet gains and fee-related income (gains realized when KKR sells its own stakes in companies or collects fees for services), performance incentive fees, and earnings from its energy and infrastructure funds.

KKR should continue generating both peer-beating yields and capital gains, thanks to its aggressive acquisition strategy, its tendency to have more-dependable fee-based income as it becomes more bank-like, and its practice of putting more of its own capital into deals than its peers.

KKR’s economic net income was $1.131 billion in the first half of the year, well above the $694.4 million in the same period last year and exceeding analyst expectations. (Economic net income, the sector’s preferred measure of income, includes the gains or losses already locked in on a deal, as well as the gains or losses yet to be booked.) Total distributable earnings came to $1.147 billion in the first half, and KKR’s second-quarter distribution per common unit rose from 42 cents to 67 cents year-over-year. Its distribution in the first half of the year totaled $1.10.

Looking to the future, analyst estimates for KKR’s dividend has to be taken with a few grains of salt. It’s difficult to forecast the exact timing of asset sales and other transactions before they are announced, so predictions for distributions have a tendency to bounce around. The ride for investors will become less bumpy in years to come, though, as KKR continues to innovate and pick up the slack created by recalcitrant banks that either don’t want to, or just can’t, lend.

Offering an attractive 8% yield even as its business is evolving to become more predictable, KKR is a buy up to $28.