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Dividend Increases For The High-Yield BDC Sector, Part 6: Gladstone Investment

Published Wed, 03 Apr 2019 10:48:23 -0400 on Seeking Alpha

BDC Dividend Changes For 2019 and Previous-Article Follow-Ups:
As mentioned in recent articles, there are a handful of Business Development Companies ("BDCs") that will likely cut dividends in 2019, including THL Credit (TCRD) as predicted in "Dividend Cuts For The High-Yield BDC Sector" and Medley Capital (MCC), which announced that it was reducing its quarterly dividend by 50% (also predicted in previous articles). However, there are also many more that will likely increase their current regular dividend and/or pay special dividends this year.
This article discusses dividend coverage for Gladstone Investment (GAIN) and the following are the three methods that I use for assessing and ranking dividend coverage:
Historical dividend coverage: Using adjusted earnings (exclude certain one-time expenses) taking into account recurring vs. one-time revenues, cash vs. PIK interest income, etc. Projected dividend coverage: Using best-, base-, and worst-case scenarios taking into account potential credit issues, portfolio growth/decline, changes to portfolio yield, various amounts of non-recurring income from dividends and fees, changes to borrowing and operational expenses. Optimal Leverage Analysis: Assessing future dividend coverage based on portfolio growth using available cash and borrowings (leverage) as well as changes in portfolio yield, apples-to-apples comparison of BDC dividend coverage using similar amounts of leverage. It is important to understand that the methodology... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
THL CREDIT 6.51   0.0 -0.51 0.84 12.84
PROSPECT CAPITAL 6.54   10.9 0.60 0.72 11.34
TCP CAPITAL 14.55   20.2 0.72 1.44 10.04
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
ARES CAPITAL 18.11   9.3 1.95 1.60 8.91
GLADSTONE CAPITAL 9.34   31.1 0.30 0.84 8.90
MEDLEY CAPITAL 2.43   0.0 -1.55 0.20 7.91
MAIN STREET CAPITAL 41.68   14.4 2.89 2.46 5.82


Older articles featuring Thl Credit (TCRD):
10% Yielding New Mountain Finance Receives Fitch Rating
Dividends By The Numbers For March 2019 And 2019-Q1
Apollo Investment: 12% Yield Supported By Improving Portfolio Quality
69 10%+ Dividend Yield WallStars Portend Ides Of March Fortunes
Dividend Increases For The High-Yield BDC Sector, Part 5: BlackRock TCP Capital
Strong Buy With 12% Yield With 30%+ Return Potential: TCG BDC
Dividend Increases For The High-Yield BDC Sector, Part 4: Main Street Capital
March Magic 10%-Plus Yield Dividend WallStars Flaunt Gains, Yields And Prices
Dividend Increases For The High-Yield BDC Sector, Part 3: TPG Specialty Lending
Dividend Increases For The High-Yield BDC Sector: Part 2