All Over The Place

Unlike most of its BDC peers, Newtek Business Services (NEWT) really pays a “variable dividend” based on its more recent profitability.

That means the quarterly payout to shareholders can fluctuate widely.

Management tries to handle the inherent uncertainty by offering up before the year even begins an estimate of the likely annual level of dividend, and follows up with frequent updates.

Projected

The most recent dividend re-projection for 2020 (including an early call for 2021) happened on November 4, 2020.

Even with the year coming to an end, NEWT gave us a dividend range of $1.90 to $2.20, down from an earlier estimate of $1.80 to $2.30.

Actual

Now, with NEWT’s just announced IVQ 2020 dividend announcement of $0.47, we  know the total for 2020 came to $2.05.

That’s just slightly below the $2.15 paid out in 2019 – which was the highest annual level yet for NEWT.

Editing

The BDC Reporter, which has been tracking how the public BDCs have performed where their 2020 distributions are compared, has reduced NEWT’s rating in the BDC Performance Table.

We had projected NEWT’s annual dividend as UNCHANGED, but have had to fall back to REDUCED.

That brings to 25 the number of BDCs that have REDUCED, SUSPENDED or DEFERRED their payouts in 2020 in response to the pandemic.

17 remain UNCHANGED and 3 have INCREASED.

Switch

At one point in 2020, NEWT – buoyed by income from arranging PPP loans – seemed to be on a path to upping its annual payout.

However, with the Congress not agreed on what to do next with the PPP, that ambition has fizzled.

Doing Fine

Still, sans PPP, NEWT is projecting a 2021 dividend range of $2.0 -$2.50 per share.

Even at the midway point that would be a record result for NEWT and suggests the BDC’s business prospects remain unimpaired.