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BDCs Continue To Affirm Dividends: Capital Southwest At 15%

Published Sun, 26 Apr 2020 10:00:00 -0400 on Seeking Alpha

BDCs provide investors with higher-than-average dividend yields (most between 10% and 30% annually). However, I'm expecting some dividend reductions or temporary suspensions when they report results.
As predicted in the previous article, CSWC slightly increased its regular quarterly dividend in February 2020 and continues to pay its $0.10 per share supplemental dividends.
On April 22, 2020, CSWC’s Board recently declared a total dividend of $0.51 per share for the quarter ended June 30, 2020.
BDCs will begin reporting results next week and investors should be paying close attention.
As mentioned earlier this month in "Picking Winners And Losers In The 18% Yielding BDC Sector," Business Development Companies continue to trade at depressed values for many reasons including being considered small cap, financial sector, and high yield, all of which have been subject to indiscriminate selling. Also discussed was assessing which BDCs will outperform using Gladstone Investment (GAIN) as an example. This article discusses Capital Southwest Corp (CSWC) which I purchased additional shares of last month along with 13 other BDCs discussed at the end along with my overall strategy for 2020.

CSWC Insider Purchases
Last month, insiders were actively purchasing additional shares below


Source: GuruFocus
Current BDC Yields
BDC pricing is directly correlated to yield expectations from the market for non-investment grade debt including BofA Merrill Lynch US Corporate B Index’ (Corp B) that I watch closely, typically making massive purchases as yields start to spike as they did last month:

Most BDCs are publicly traded with a highly transparent structure subject to oversight by the SEC, states, and other regulators, providing investors with higher-than-average dividend yields (most between 10% and 30% annually). However, I'm expecting quite a few to cut or temporarily suspend dividends when they report results (see dates at the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MONROE CAPITAL 10.48   18.4 0.57 1.40 13.60
THL CREDIT 6.96   0.0 -0.86 0.84 12.09
PENNANTPARK INVESTMENT 6.32   21.8 0.29 0.72 11.32
PROSPECT CAPITAL 6.71   16.8 0.40 0.72 10.76
APOLLO INVESTMENT 16.78   14.2 1.18 1.80 10.73
FIDUS INVESTMENT 14.84   8.8 1.69 1.56 10.53
TCP CAPITAL 13.75   29.3 0.47 1.44 10.48
STELLUS CAPITAL INVESTMENT 13.45   8.2 1.65 1.36 10.16
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
PENNANTPARK FLOATING RATE CAPITAL 11.68   30.0 0.39 1.14 9.81
HERCULES TECH GROWTH CAP 13.26   10.0 1.32 1.28 9.55
GOLDMAN SACHS BDC 20.29   22.5 0.90 1.80 8.88
GLADSTONE CAPITAL 9.50   63.3 0.15 0.84 8.84
SARATOGA INVESTMENT 24.98   8.4 2.97 2.24 8.59
ARES CAPITAL 19.19   10.5 1.82 1.60 8.39
SOLAR SENIOR CAPITAL 17.32   18.8 0.92 1.41 8.17
GOLUB CAPITAL BDC 18.55   15.7 1.18 1.28 6.89
GLADSTONE INVESTMENT 12.34   7.4 1.67 0.82 6.73
MAIN STREET CAPITAL 43.18   16.8 2.57 2.46 5.69

MONROE CAPITAL - MRCC
MONROE CAPITAL - MRCC  


Older articles featuring Monroe Capital (MRCC):
Monroe Capital Corp: Rising Share Price & Safe 10% Dividend
Oasis Of Dividends From This 10.8% Yielding Sector
This 10% Yielding Sector Will Continue To Rally In 2021
2 Dividend Stocks To Buy With Improving Book Values, Both From PennantPark
11% Dividend Yielding BDC Sector Continues To Soar
Reader Favorites And Rogues 9/9 To 10/8 Show 35 Dividend Dogs Ready To Adopt
BDC Retirement Income: 12% Yielding New Mountain Finance
62 10%+Yield Dividend Stocks Priced $5-15 For August Dog Days
Preliminary Q2 Results For The BDC Sector Currently Yielding 13%
Upcoming NAV Changes For The BDC Sector Yielding 14%

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