Feb. 6 at 7:29 PM
$GBDC By the DIP ...
Dividend Reset, Coverage - Yield Looks Sustainable
That being said, it did just reset its dividend to accommodate lower base rates due to the Fed's rate cuts over the past few years, as well as tighter spreads and muted mergers and acquisitions in the sector. Moreover, it trades at a steep discount, and the yield on cost for me is very attractive, as its base dividend is now at
$0.33 per quarter. Given its adjusted NII per share this past quarter of
$0.38, its base dividend is covered at around 1.15 times, which is one of the more conservative coverage ratios in the BDC space and puts it on a pretty sustainable path moving forward, which is quite attractive given that its new base dividend yield is 10.7%. Additionally, the company plans to continue paying out supplemental dividends in an amount of about 50% of its excess NII beyond what it pays out in base dividends. So its real yield will likely be 11%+ moving forward.
