Gladstone CapitalNASDAQ: GLAD

Gladstone Capital is a business development company that offers financing and assistance to lower middle market businesses with an EBITDA ranging from $3M to $25M. Since my initial coverage in September of 2023, the stock has delivered a total return of more than 16%. GLAD currently has a dividend yield of 8.9% and pays out dividends monthly, which is appealing to investors seeking income.

The key figures for Gladstone Capital (GLAD) offer a glimpse into its performance in the quarter ending March 2024, but it could be beneficial to analyze certain metrics against Wall Street projections and previous year's results.

We examine the performance of business development companies in the second week of April and discuss some important trends. BDCs, like other income investments, saw a decline due to higher-than-anticipated inflation. A study indicated that BDCs may not offer significant risk-adjusted returns, a point that may not be significant for investors.

BDC Weekly Review: The Reasons Behind BDCs' Desire to Offer Stock

In December of last year, I wrote a positive article about Gladstone Capital, highlighting its focus on defense and ability to generate attractive yields.

Gladstone Capital Corporation reported decent dividend payout metrics and grew its net asset value in the most recent quarter. GLAD has a growing loan portfolio, with a boost in originations from higher net new investment activity. The dividend seems well-covered, but the BDC's net asset value premium may not be justified. Hold classification recommended.

Gladstone Capital saw its net asset value grow by 22 cents sequentially and kept its monthly cash distribution unchanged at $0.0825 per share. The BDC currently offers a 9.6% dividend yield, with its fiscal 2024 first quarter NII per share covering its dividend by 110%. Non-performing debt also dipped by 100 basis points to 0.4% of GLAD's total debt portfolio at the end of the first quarter, with the BDC prioritizing first lien originations.

Gladstone Capital is a BDC designed for high-income and currently offers an appealing 9.7% dividend yield. GLAD focuses on making loans to the lower middle market and has a portfolio spread across 12 industries. GLAD has demonstrated steady growth in NAV/share and NII/share, and carries a low debt-to-equity ratio, giving it plenty of capacity to fund opportunistic growth.

Gladstone Capital (GLAD) came out with quarterly earnings of $0.27 per share, missing the Zacks Consensus Estimate of $0.28 per share. This compares to earnings of $0.25 per share a year ago.