From 24/7 Wall St. · Chris Lange · · 1m 30s
Prospect Capital Yields 28% Dividend
Prospect Capital's 28% dividend yield sparks questions about sustainability amid falling earnings.
In brief
Prospect Capital's 28% dividend yield sparks questions about sustainability amid falling earnings. Prospect Capital's 28% dividend yield may be unsustainable due to declining net investment income and rising debt. Originally reported by 24/7 Wall St..
Prospect Capital Yields 28%
Shares of Prospect Capital (NASDAQ:PSEC) have fallen 33.11% this year to $1.50, pushing the forward distribution yield to 28%.
Dividend Cuts and Earnings Decline
Prospect Capital's monthly distribution dropped from $0.06 to $0.035, with net investment income falling from $0.19 to $0.15 over three quarters.
Net Asset Value Decline
Net asset value per share fell to $5.71 from $6.56 a year earlier, with $223.7 million in net realized losses for fiscal 2026.
Bond Maturity Risk
A $264.5 million institutional bond matures in November 2026, requiring the Valley Electric sale to deliver $281 million in proceeds.
FS KKR Capital's 17.4% Yield
FS KKR Capital (NYSE:FSK) trades at $10.13 with a 17.4% yield from a $1.76 annualized payout, but its distribution has been cut multiple times.
Fee Waiver Expiry
FS KKR Capital's 50% incentive fee waiver expires in four quarters, thinning coverage of its dividend after the waiver ends.
Ares Capital's 10.4% Yield
Ares Capital (NASDAQ:ARCC) pays $0.48 quarterly for a 10.4% yield, but core earnings trail the dividend by one cent.
Earnings Shortfall Warning
Ares Capital's non-accruals rose to 2.4% from 1.8%, NAV fell to $19.35, and leverage climbed to 1.15x from .09x.
The bottom line
Prospect Capital's 28% dividend yield may be unsustainable due to declining net investment income and rising debt.
