The Latest BDC Dividend Announcements And What They Tell Us About The State Of The BDC Sector

Steady

NEWS

In recent days, three BDCs have reported their dividends for the IIIQ 2026. Gladstone Investment (GAIN) will pay $0.08 per share in April, May, and June, while Gladstone Capital (GLAD) will distribute $0.15 per share in each of those months. Stellus Capital (SCM) - also on a monthly payout schedule - will pay $0.1133, or $0.34, in the IIQ 2026.

For the record, all these dividend levels are unchanged from those paid out in IQ 2026. Note, though, that GAIN and SCM have not altered their regular dividends in 2026 from their level in 2025.

Pre-emptive

GLAD, though, cut its monthly dividend from $0.165 a month to the current $0.15 beginning in the IVQ 2025 - a (9%) cut. The BDC justified the move by reference to the impact - both actual and expected - of lower interest rates. Subsequent to the announced cut, GLAD's Net Investment Income Per Share (NIIPS) dropped to $0.50, essentially in line with the prior payout level. The analyst consensus is for GLAD's NIIPS to reach $0.48 in each of the next two quarters and log NIIPS of $1.93 for the fiscal year ending September 2026, down from $2.02 in FY 2025.

STATUS REPORT

Since the beginning of this year, we've been projecting the likely annual payout for 45 of the 46 BDCs we track. (Monroe Capital - MRCC - will shortly be closed down and is left out of our calculations. The most recent dividend announcements for GAIN, GLAD, and SCM are all in line with our expectations.

The Few

Overall, we expect that only 2 BDCs will pay out more in 2026 than in 2025, while 6 will be unchanged and 37 will be lower. This will be the second year in a row that BDC dividends have shrunk. In 2025, 29 BDCs paid out less than in 2024, and the sector as a whole was (5.2%) down due to cuts like the one GLAD took during the year. In 2026, we currently estimate that BDC dividends overall will drop by (12.9%) from their 2025 level. Leaving out MRCC, our data shows the 2-year decline amounts to just shy of (20%).

Looking at the longer-term picture, by the end of 2026, the BDC sector as a whole will be paying out only slightly more than in 2021, when the Fed Funds rate was in the range of 0%-0.25%, versus 3.5%- 3.75% currently. Interestingly, though, 24 individual BDCs will boast a higher payout this year than 5 years ago, 1 will be unchanged, and only 23 will be lower.

Winners & Losers & Those In-Between

In our opinion, this speaks, in the same way as the BDC NAV Change Table, to the very different financial performance achieved by the individual BDCs during the Golden Years of 2022-2023 and up to the present day. Very roughly speaking, based on this data, one could argue that slightly over half of the public BDC universe has performed well, and the rest less so.

The worst performers by our count - BDCs whose dividend level has dropped (25%) or more from their 2021 level - despite a highly favorable environment most of the time - amount to 11 names - a quarter of the BDC universe. In the most extreme example, the dividend payout percentage loss may be as high as (100%) if Investcorp Credit Management (ICMB) cannot find a way to resume paying a cash dividend in 2026, as discussed in a prior article.

VIEWS

Not So

We've been seeing many commentators in the financial press gleefully pointing out that 40 of 46 BDCs are trading below their net asset value per share (NAVPS) as irrefutable proof that investors don't believe the portfolio values put forward by the managers.

This is usually followed by an entirely incorrect diatribe about how BDC valuations are "opaque" and unreliable, and "something needs to be done" to protect us all before confidence in the sector can be restored.

However, we believe BDC prices have dropped for almost every BDC for a much more prosaic reason: the decline actual and expected, in the level of dividends the sector has been paying out since 2024.

In our minds, it is no coincidence that BDC prices - as measured by the highest price of its exchange-traded fund with the ticker BIZD to its current level - have fallen (25%), almost in lock step with the (20%) in lower dividend payouts.

BDC investors don't really give a fig about a BDC's book value.

What matters is the cash on the barrel received as distributions.

That's reflected in the way Oxford Square Capital (OXSQ), whose NAVPS has dropped by two-thirds in the last 5 years, trades at a premium to book because of its steady dividend: $0.035 per share per month paid since July 2020.

For investors trying to estimate where BDC prices might go, we suggest looking to the dividends.

That's why the BDC Reporter tracks each BDC's historical dividend performance and seeks to project what to expect as far into the future as possible.

We'll be publishing the BDC Dividend Outlook Table shortly for our Premium subscribers, including our estimate of each BDC's likely 2026 payout.