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Gladstone Investment's Dividend Sustainability Analysis (Includes April-December 2019 And Fiscal 2020 Special Periodic Dividend Projections)

Published Thu, 14 Mar 2019 22:45:06 -0400 on Seeking Alpha

Author’s Note: This article is a detailed analysis of Gladstone Investment Corp.’s (GAIN) dividend sustainability. I have performed this analysis due to the number of readers who have specifically requested such an analysis be performed on GAIN in light of recent earnings/events. 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 GAIN through 2019. This analysis will be provided after a brief overview of GAIN’s regulated investment company (“RIC”) classification per the Internal Revenue Code (“IRC”). The first two tests will focus on GAIN’s net investment company taxable income (“ICTI”) and the company’s undistributed taxable income (“UTI”). These two tests will be termed “Test 1” and “Test 2.” The third test will focus on GAIN’s unrealized appreciation (depreciation) on investments account and be termed “Test 3.”
Understanding the tax and dividend payout characteristics of GAIN will provide investors with an overall better understanding of the business development company (“BDC”) sector as a whole. From reading this article, investors will better understand how a RIC per the IRC comes up with the company’s current dividend per share rate and specific signs when... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MEDLEY MANAGEMENT 3.37   0.0 -0.54 0.80 22.22
APOLLO INVESTMENT 15.72   18.5 0.85 1.80 11.52
PROSPECT CAPITAL 6.57   13.1 0.50 0.72 10.86
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
TCP CAPITAL 14.26   18.5 0.77 1.44 10.02
NEWTEK BUSINESS SERVICES 20.28   0.0 0.00 1.60 9.77
ARES CAPITAL 17.17   8.5 2.02 1.60 8.96
SOLAR CAPITAL 21.75   13.8 1.58 1.64 7.63
OAKTREE STRATEGIC INCOME 8.24   45.8 0.18 0.62 7.46
GOLUB CAPITAL BDC 17.90   13.6 1.32 1.28 7.11
MEDLEY CAPITAL 3.20   0.0 -1.63 0.20 6.21
MAIN STREET CAPITAL 38.44   13.7 2.81 2.40 6.17
PENNANTPARK FLOATING RATE CAPITAL 12.98   13.8 0.94 0.76 5.90
ALTRIA GROUP 56.75   15.4 3.68 3.20 5.70
BLACKROCK 433.55   16.3 26.62 13.20 3.06