Oxford Square Capital: Staying Far Away From This Deteriorating BDC As A Dividend Cut Is Incoming
I maintain my sell rating on Oxford Square Capital due to rising non-accrual levels, declining net investment income, and unsupported dividend distributions. OXSQ's portfolio performance remains poor, with a price decline of over 82% since inception and a high non-accrual rate of 13.1%. The portfolio's heavy allocation toward CLO equity and sector concentration increases vulnerability, making it less appealing compared to peers.
Golub Capital BDC: About 10%-Yielding Cash Cow
Golub Capital supports its dividend with net investment income and offers a 10% yield. The BDC's dividend coverage is solid, with a Q4'24 coverage ratio of 1.21X, and it maintains chiefly high-quality first lien investments. Golub Capital's key financial metrics surged due to acquisition activity, with interest income, total investment income, and net investment income increasing by 38%, 36%, and 43%.
2 BDCs That Could Be The Next Stars In The Sector
The BDC segment offers significant opportunities for retail investors due to low competition from institutional investors and potential valuation inefficiencies. The best thing that could happen is if we identify these inefficiencies within BDCs that carry robust fundamentals and safe dividend coverage levels. In this article, I share two picks, which, in my opinion, are set to become the next stars in the BDC space (similar to BXSL).
Barings BDC: Is The Thrill Of Victory Worth The Agony Of Defeat?
Barings BDC Inc, a small-cap company, offers a 10% yield and trades at a 9.16% discount to NAV, making it attractive for income investors. Despite slight declines in earnings and credit quality, Barings BDC's fundamentals and management's share buybacks support its dividend safety in the near to medium term. The business development company's balance sheet is solid with a leverage ratio of 1.15x and significant liquidity, ensuring stability amidst market volatility and interest rate changes.
BDC Weekly Review: Two BDC Performance Headwinds
We take a look at the action in business development companies through the third week of November and highlight some of the key themes we are watching. BDCs posted a strong 2% return this week as market sentiment improved and Treasury yields stabilized. Tightening credit spreads and increasing covenant-lite deals pose potential future risks, reducing portfolio yield and potential capital gains.
Blue Owl Capital: A Magnificent 10% BDC Yield
Blue Owl Capital is a well-run BDC with strong dividend coverage, a solid balance sheet, and potential for growth. The recent acquisition of Blue Owl Capital Corporation III enhances its focus on first liens and increases the combined investment value to $17.7B. OBDC trades at net asset value, presenting a good deal for investors, with potential revaluation to a 1.10-1.15X price-to-NAV ratio.
BDC Weekly Review: Key Q3 Earnings Trends
We take a look at the action in business development companies through the second week of November and highlight some of the key themes we are watching. BDCs were flat this week in aggregate, outperforming other income sectors, with PSEC and TPVG bookending month-to-date returns. Q3 earnings reveal a slight decline in net investment income due to rate cuts, tight market spreads, and refinancing into higher coupon debt.
Barings BDC: Solid Hold For Existing Shareholders
Barings BDC focuses on sponsor-backed investments in middle market businesses with EBITDA ranging from $15m to $75m, ensuring a diversified portfolio. BBDC's $2.4B portfolio is predominantly in secured debt, with 68% in first-lien and 4% in second-lien, highlighting its defensive nature. The portfolio is well-diversified, with the top 10 companies accounting for only 24%, and non-accruals are low at 0.5% as of September 30, 2024.
Golub Capital BDC: A Good Quarter But Watch Portfolio Quality
Golub Capital BDC delivered a 2.4% total NAV return over the quarter, trades at an 11.6% total dividend yield, and has a well-diversified loan portfolio. The company's adjusted net investment income fell slightly, and the supplemental dividend is expected to fall over time due to lower short-term rates. Portfolio quality saw a slight decline, with rising non-accruals and net realized losses.
Ares Capital: BDC Market Leader That You Shouldn't Miss Buying
Ares Capital stock has continued to outperform its BDC peers, underscoring its market leadership. ARCC's solid core EPS payout ratio and low non-accrual rates assure dividend sustainability and robust earnings capabilities. Income investors seeking potential capital appreciation should find ARCC's bullish proposition attractive.
Trinity Capital: An Asset Manager In BDC Clothing
Trinity Capital CEO Kyle Brown explains how they're an asset manager in BDC clothing. Why dividend stability and growth, NAV stability and growth, EPS, and ROE are the metrics most focused on.
Nuveen Churchill Direct Lending: The Market Is Sleeping On This BDC
NCDL is a business development company, offering high income potential for its shareholders. Its portfolio is defensively structured with a high degree of diversification, first-lien exposure, and low non-accruals. NCDL's outstanding regular dividend coverage provides a wide margin of safety in the case of further interest rate cuts (sensitivity analysis provided).
