Prospect Capital Corporation (NASDAQ:PSEC) Plans Monthly Dividend of $0.04

Key Points

• Prospect Capital declared a monthly dividend of $0.035 per share—$0.42 annualized, with a reported yield of 29.5%. Shareholders of record December 29 are scheduled to be paid January 20.
• The dividend’s sustainability may be a concern: analysts expect $0.35 in EPS next year versus $0.42 in annual dividends, implying a projected payout ratio of 120%, despite the current payout ratio of 89.4%.
• Quarterly EPS of $0.15 beat the $0.10 consensus, but revenue missed estimates and net investment income declined year over year. The company also announced a $200 million common-share repurchase program.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report) announced a monthly dividend on Wednesday, November 4th. Investors of record on Tuesday, December 29th will be paid a dividend of $0.0350 per share by the financial services provider on Wednesday, January 20th. This represents a $0.42 annualized dividend and a dividend yield of 29.5%. The ex-dividend date is Tuesday, December 29th.

Prospect Capital has decreased its dividend by an average of 0.1% annually over the last three years. Prospect Capital has a dividend payout ratio of 89.4% indicating that its dividend is currently covered by earnings, but may not be in the future if the company's earnings fall. Analysts expect Prospect Capital to earn $0.35 per share next year, which means the company may not be able to cover its $0.42 annual dividend with an expected future payout ratio of 120.0%.

Prospect Capital Trading Down 1.0%

NASDAQ PSEC traded down $0.01 on Thursday, reaching $1.43. The company had a trading volume of 5,275,880 shares, compared to its average volume of 5,117,919. The firm has a market cap of $760.69 million, a price-to-earnings ratio of 28.50 and a beta of 0.84. The company has a debt-to-equity ratio of 0.64, a current ratio of 0.87 and a quick ratio of 0.87. Prospect Capital has a fifty-two week low of $1.40 and a fifty-two week high of $3.12. The business has a 50 day moving average of $1.93 and a two-hundred day moving average of $2.35.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last announced its earnings results on Wednesday, November 4th. The financial services provider reported $0.15 EPS for the quarter, topping the consensus estimate of $0.10 by $0.05. Prospect Capital had a return on equity of 12.15% and a net margin of 19.33%. The firm had revenue of $151.74 million for the quarter, compared to the consensus estimate of $163.14 million. Analysts forecast that Prospect Capital will post 0.38 EPS for the current year.

Key Headlines Impacting Prospect Capital

Here are the key news stories impacting Prospect Capital this week:

• Positive Sentiment: PSEC reported $0.15 per share, above the $0.10 analyst consensus, and announced a $200 million common-share repurchase program. Repurchases could support per-share value, though the announcement does not establish how much the company will buy back. Prospect Capital results and repurchase program
• Neutral Sentiment: Call-option trading rose to 2,565 contracts, 353% above its average volume. This suggests increased speculative interest, but options activity alone does not reliably predict the stock’s direction.
• Negative Sentiment: Quarterly revenue of $151.7 million fell short of the $163.1 million consensus. Net investment income was $76.4 million, down from $79.4 million a year earlier, while NII per share declined to $0.15 from $0.17. The earnings beat therefore came alongside weaker underlying income. Prospect Capital earnings report
• Negative Sentiment: An Associated Press earnings snapshot reported a $21 million net loss, highlighting that the per-share earnings beat does not mean the company was profitable on a net basis. Fiscal Q1 earnings snapshot
• Negative Sentiment: A Seeking Alpha article raised concerns about PSEC’s high stated yield being supported by a shrinking portfolio, adding to questions about the sustainability of income and distributions. Analysis of Prospect Capital’s yield and portfolio

About Prospect Capital

Prospect Capital Corporation NASDAQ: PSEC is a business development company that provides financing and investment capital to middle-market companies. The company primarily invests in privately held businesses through first-lien and second-lien loans, mezzanine debt, and other debt securities, while also making equity and equity-related investments in selected companies.

Prospect Capital invests across a range of industries and has additional exposure to areas such as real estate, structured credit, and financial services.

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