Dividend Dynamo--BDC Check‐In

Business Development Companies (BDCs) are, in plain English, exchange‑listed lenders to U.S. middle‑market firms; they are credit funds with a dividend habit. They must distribute most taxable income, which is why yields tend to be plumper than your average blue chip, and many hold floating‑rate loans that can cushion results through rate cycles. If you want the official, homework‑worthy overview, the Investor bulletin on BDCs is the best starting point.

Ultimately, our family keeps quite a few BDCs in our portfolio, as they can be a powerful way to create a dividend snowball with time and patience.

Where the rubber meets the road: sector prices are still about 18% below the late‑2021/early‑2022 peaks, yet regular quarterly dividends are ~13% higher today. That mismatch—cheaper prices, fatter checks—supports a reasonable +10% to +20% catch‑up in prices over the coming quarters if markets behave. Strip out the names that have cut (PSEC, TPVG, TCPC, GSBD, OCSL) and one likely cutter (MRCC), and the average is only ~7% below prior highs while paying ~24% more in regular dividends. In other words, the income stream has grown faster than the charts.

Drilling down, TSLX sits roughly 1% under its previous high while paying ~12% more in regular dividends—coverage looks easy given four‑year average earnings around $0.57 per quarter and about $0.58 over the last two quarters versus a $0.46 regular dividend. FDUS trades about 5% above its old high, but that earlier baseline came with a ~26% lower regular dividend, so the higher payout does a lot of the heavy lifting. By contrast, the recent or prior base‑dividend cutters (PSEC, TPVG, TCPC, GSBD, OCSL) naturally sit well under old peaks, and MRCC still flashes on my radar as facing a ~30%–40% cut later this year in our work. (As an aside: dividend policy can’t defy gravity forever, even if management presentations try!)

One illustration of our conservative long‑term framing is GBDC. It once traded near $16.10 when the regular dividend was $0.30 per share; today the regular is $0.39—that’s +30%—yet our LT target is just $17.50, only ~9% above that previous price high. Meanwhile, there was a small management shuffle: on August 25, 2025, COO Matthew W. Benton resigned, with responsibilities assumed by Timothy J. Topicz—the 8‑K notes no disagreement with the board. If you like to see it in black‑and‑white, here’s the filing: GBDC Form 8‑K (Aug. 25, 2025).

On the tape last week, prices broadly rallied as yield expectations eased—BDCs are still yield animals, and lower demanded yields lift multiples. TPVG led, helped by continued insider buying in the mid‑$6s. Among the previously “best‑priced vs. LT target” names, NMFC, PSEC, and CSWC gained roughly 2%–4%, though PSEC looked more like a classic dead‑cat bounce after a bruising 2025. GLAD slipped (still screens richer than we’d like), and NCDL fell as well; it isn’t covering its dividend even after fee waivers despite leverage being near the top of the target range, so we’re waiting on Q3’25 results before getting involved. Ex‑GLAD and NCDL, the basket added about 1.5% and could have more room if rates and credit trends cooperate.

Quality has generally been rewarded in 2025. TSLX, TRIN, MAIN, GAIN, and CSWC are still the YTD standouts and also our heaviest weights (40%+ of the BDC sleeve). TRIN tacked on another ~2.5% and should announce its Q3’25 dividend later this month. MRCC remains buoyed by its pending tie‑up with HRZN, but both are still lower‑quality in our framework, given steep NAV declines and higher leverage—mergers don’t magically erase credit costs.

A couple of date notes for the income calendar: MAIN has an ex‑dividend date of September 8, 2025, for its regular monthly payout—own the shares before the ex‑date if you want that distribution. Main Street’s dividend page keeps the schedule current. And CSWC maintained its $0.1934 monthly regular dividend and declared another $0.06 supplemental for Q4’25, in line with our base case ($0.24 in supplementals for 2025). You can read the details here: CSWC Q4’25 Dividend Announcement.

How to use all this? Favor coverage and cost discipline; the BDCs with stronger underwriting and leaner expense structures tend to win on both dividend durability and valuation. Keep an eye on dividend paths; cuts are destiny in this sector, and expect dispersion to remain high. Prices are still below old highs, income is above old levels, and selection matters more than beta. (Said differently: buying the whole haystack may work, but picking better needles works better.)

Buy quality, hold for a generation. That’s our approach with BDCs.