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Solar Capital's Detailed Dividend Sustainability Analysis (Includes 2019 Dividend Projections)

Published Mon, 17 Dec 2018 16:39:04 -0500 on Seeking Alpha

Author's Note: This article is a detailed analysis of Solar Capital Ltd.'s (SLRC) dividend sustainability. A growing number of readers have asked that I expand my detailed dividend sustainability "main ticker" articles to cover more business development company ("BDC") stocks throughout the year. For readers who just want the summarized conclusions/results, I would suggest to scroll down to the "Conclusions Drawn" section at the bottom of the article.
Focus of Article:
The focus of this article is to provide a detailed analysis with supporting documentation (via three tests) on the dividend sustainability of SLRC over the foreseeable future. This analysis will be provided after a brief overview of SLRC's regulated investment company ("RIC") classification per the Internal Revenue Code ("IRC"). The first test will focus on SLRC's net investment income ("NII"). This test will be termed "TEST 1". The next two tests will focus on SLRC's net investment company taxable income ("ICTI") and cumulative undistributed taxable income ("UTI"). These two tests will be termed "TEST 2" and "TEST 3". At the end of this article, there will be a conclusion based on the results obtained from TEST 1, TEST 2, and TEST 3 about the dividend sustainability of SLRC through 2019. I will also provide my projection regarding SLRC's quarterly dividend per share rate range... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MEDLEY CAPITAL 2.88   0.0 -2.04 0.40 14.03
FS INVESTMENT 5.85   0.0 -0.07 0.76 13.13
APOLLO INVESTMENT 14.22   14.8 0.96 1.80 12.63
PROSPECT CAPITAL 6.68   6.6 1.02 0.72 10.68
NEWTEK BUSINESS SERVICES 19.30   0.0 0.00 2.00 10.59
TCP CAPITAL 14.10   13.8 1.02 1.44 10.31
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
ARES CAPITAL 16.34   7.4 2.20 1.56 9.58
GLADSTONE INVESTMENT 10.54   3.4 3.12 0.82 7.88
PENNANTPARK FLOATING RATE CAPITAL 12.59   14.6 0.86 0.95 7.64
OAKTREE STRATEGIC INCOME 8.27   12.0 0.69 0.62 7.49
GOLUB CAPITAL BDC 17.60   12.8 1.37 1.28 7.41
MAIN STREET CAPITAL 36.03   9.7 3.70 2.34 6.71
BLACKROCK 396.42   11.4 34.91 12.52 3.15