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Assessing Main Street Capital's 2019 Dividend Sustainability (Includes Special Periodic Dividend Projection)

Published Mon, 15 Apr 2019 02:27:31 -0400 on Seeking Alpha

Author’s Note: This article is a very detailed analysis of Main Street Capital Corp.’s (MAIN) dividend sustainability. I have performed this analysis due to the continued number of readers who have specifically requested such an analysis be performed on MAIN at periodic intervals. 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 MAIN through 2019. This analysis will be provided after a brief overview of MAIN’s regulated investment company (“RIC”) classification per the Internal Revenue Code (“IRC”). The first two tests will focus on MAIN’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 MAIN’s unrealized appreciation on investments account and be termed “TEST 3”. After these three tests, I will also include a discussion of MAIN’s recently announced change when it comes to the company’s monthly and special periodic dividend per share rates over the next five years.
Understanding the tax and dividend payout characteristics of MAIN will provide investors with an overall better understanding of the business development company... Read more

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APOLLO INVESTMENT 16.34   16.2 1.01 1.80 11.06
PROSPECT CAPITAL 6.67   11.1 0.60 0.72 10.86
TCP CAPITAL 14.06   19.5 0.72 1.44 10.18
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
PENNANTPARK FLOATING RATE CAPITAL 11.64   29.1 0.40 1.14 9.80
ARES CAPITAL 18.16   9.3 1.95 1.60 8.82
NEWTEK BUSINESS SERVICES 21.80   0.0 0.00 1.84 8.32
MEDLEY CAPITAL 2.44   0.0 -1.55 0.20 8.06
SOLAR CAPITAL 20.37   12.0 1.70 1.64 8.02
OAKTREE STRATEGIC INCOME 8.21   23.5 0.35 0.62 7.52
GLADSTONE INVESTMENT 11.16   4.5 2.48 0.82 7.24
GOLUB CAPITAL BDC 17.81   14.6 1.22 1.28 7.12
BLACKROCK 473.24   17.8 26.55 13.20 2.80