Goldman Sachs BDC: Widely Underrated
Goldman Sachs BDC remains a Buy for passive income investors, offering a high NII yield and trading at a significant discount to NAV. Despite not fully covering its dividend in Q1'25 and a rising non-accrual ratio, I see the dividend as sustainable due to the revised payout structure. The BDC's income metrics are under pressure from higher repayments, lower originations, and credit quality issues, but peer comparisons remain favorable.
Nuveen Churchill Direct Lending: This High-Yielding BDC Remains Undervalued
NCDL remains attractively valued, trading at a notable discount to book despite solid performance and a well-diversified, high-quality portfolio. Fee waivers rolling off will reduce outperformance, but the new fee structure is still shareholder-friendly and supports a sustainable dividend yield. Share repurchases at a discount and management's focus on shareholder interests further enhance returns.
Kayne Anderson BDC: Q1 Earnings Weaken Appeal (Rating Downgrade)
Kayne Anderson remains attractively valued in a premium BDC sector, but recent earnings and weaker distribution coverage warrant caution. Net investment income has declined, and dividend coverage is now tight, raising the risk of a potential cut if conditions don't improve. Portfolio fundamentals are strong with diversified, first-lien, floating-rate debt, but rising non-accruals and high rates present headwinds.
Kayne Anderson BDC: Why It Remains My Top Pick In The Sector
KBDC is my largest BDC holding, driven by its conservative balance sheet, high portfolio quality, and attractive valuation. Since IPO, KBDC has delivered stable dividends and outperformed the BDC index, even during challenging market conditions. Recent Q1 2025 results highlight some areas for investor concern, but the core investment thesis remains intact.
MidCap Financial's Q1 Results Confirm Weaker BDC Investment Returns, Still Undervalued
MidCap Financial's Q1 results were weak but in line with peers, reflecting lower investment income and asset yields as SOFR rates declined. Management is actively repositioning the portfolio, notably reinvesting Merx proceeds at higher yields and refinancing debt to lower costs, supporting future earnings growth. Despite a slight earnings miss, the dividend remains very safe, with strong cash reserves and upside potential from increased leverage and Merx reinvestment.
BDC Weekly Review: Unrealized Depreciation Nearly Universal In Q1
We take a look at the action in business development companies through the second week of May and highlight some of the key themes we are watching. The BDC sector remained flat on the week, with CGBD leading the decline. The median BDC valuation is at a 12% discount, making the sector attractive for new allocations. Net unrealized depreciation is a key theme this earnings season, driven by wider public credit spreads, leading to a median NAV drop of around 1% in Q1.
Main Street Capital: A Good Choice To Navigate Concerns Of The BDC Sector
Main Street Capital remains a top-quality BDC with solid fundamentals, strong management, and consistent income generation, as evidenced by robust Q1 earnings. Despite a recent 11.5% price decline, MAIN still trades at a 68.5% premium to NAV, well above its historical average. Macro risks and sector-wide premium valuations make me hesitant to add to my MAIN position or increase BDC exposure right now.
Golub Capital: Another Good Quarter From This 11%-Yielding BDC
Golub Capital BDC delivered a solid quarter with a 2% total NAV return, trading at an 11% dividend yield and a 6% discount to NAV. The company's portfolio is well-diversified with 368 positions, primarily in floating-rate first-lien loans, focusing on the software and healthcare sectors. Despite a slight NAV decline and net realized losses, GBDC's low-cost fee structure and resilient portfolio have driven strong performance, beating the median BDC by 2.5%.
Chicago Atlantic BDC, Inc. (LIEN) Reports Q1 Loss, Lags Revenue Estimates
Chicago Atlantic BDC, Inc. (LIEN) came out with a quarterly loss of $0.34 per share versus the Zacks Consensus Estimate of $0.34. This compares to loss of $0.01 per share a year ago.
Ares Capital: A Top BDC Choice For Income Investors
Ares Capital missed EPS expectations for Q1, but results were nonetheless very robust; ARCC grew its portfolio, and maintained high balance sheet quality, with a low non-accrual percentage. I rated Ares Capital a hold previously, due to its high-yield and high valuation multiplier. Ares Capital's diversified portfolio and first lien strategy, combined with 326% Y/Y growth in net commitments, highlight its growth potential.
BDC Weekly Review: Bimodal Q1 Numbers Weigh On The Sector
We take a look at the action in business development companies through the first week of May and highlight some of the key themes we are watching. BDCs fell around 1.5% this week due to a couple of weak Q1 reports, with the sector still below pre-Liberation Day levels. Despite recent dips, historically resilient BDCs are showing strong ROE figures, suggesting selective opportunities for patient investors.
Ares Capital: Stalwart BDC Keeps Rolling Along With A Solid Q1 Result
Ares Capital delivered a solid 2.1% total NAV return in Q1, trading at a 9.4% dividend yield and a 3% premium to book. Core net investment income dropped to $0.50, with GAAP NII steady at $0.54; dividend coverage fell to 104%, but the dividend remains stable. Portfolio quality remains stable with non-accruals at 0.9% and a diversified portfolio; leverage is low but may rise as lending opportunities increase.
