Two BDCs Announce Unchanged Quarterly Dividends

Noteworthy

INTRODUCTION

As our readers will know better than most, public BDCs have been cutting their distributions for some time now. By our count, 6 BDCs reduced their regular dividend levels in 2025 followed by 15 already this year - including a few from the year before. This is the inevitable result of the drop in the Fed Funds rate from a high of 5.25% to 3.75% currently, and a far more competitive market for new investment activity in the past two and half years which has compressed loan spreads. Another factor is that many BDCs that booked unsecured note offerings at bargain basement rates during the ZIRP years have had to refinance the debt at a far higher yield. 

What is remarkable is not that so many BDCs are having to cut their shareholder payouts but that a significant number have not “bent the knee” and continue to maintain a steady payout pace. This was illustrated in recent days by Saratoga Investment (SAR) and Trinity Capital (TRIN). We’ll discuss each BDC in turn below and then evaluate how many more stable dividend payers remain in the public BDC space.

Saratoga Investment (SAR)

For historical reasons, SAR’s fiscal year is unique amongst BDCs, ending in February. As a result, dividend announcements are for unusual periods. On Tuesday, the BDC announced 3 more monthly dividends for the fiscal IQ 2027, which ends in May 2026. 

SAR switched to a monthly dividend scheme some time ago, a move that has been very popular with investors and is part of a much bigger trend to these more frequent payments in the industry.

Anyway, SAR has maintained a two-year streak of paying the same dividend. While some other BDCs on their IVQ 2025 conference calls that did not cut their payouts hinted they might do so because of pressure on earnings, SAR seemed committed to sticking to the current scheme. This has confused some investors, who note the discrepancy between the BDC’s $ 3.00-per-year payout pace and its projected FY 2027 recurring earnings per share of $2.34.

However, SAR boasts $2.30 to $2.50 of undistributed “spillover income” per share. That’s partly a function of earlier distributions that were far short of earnings, but also the result of booking net realized equity gains of late. In 2025, the BDC paid out a “special” dividend of $0.25 per share to stay within BDC tax rules despite maintaining an elevated level of regular distributions in excess of its nominal recurring profits.

We may get a repeat in 2026, but management has not explicitly said so. In any case, the chances of the BDC getting through this calendar year, which is the metric we track, without cutting its $0.25 monthly dividend seem very good. In fact, we’re beginning to estimate likely BDC dividend payouts for 2027, and SAR seems like a good candidate to continue paying $3.00 or more next year as well. We rate our confidence in the BDC Reporter’s dividend projection as HIGH for this year - 5 months in already - and MODERATE for 2027. 

Trinity Capital (TRIN)

The venture debt BDC, like SAR, has performed very well in recent years. The difference has been that recurring earnings have consistently exceeded the BDC’s payout. In 2025, earnings were $2.08 per share, and the payout, in the form of 4 quarterly dividends of $0.51 each, amounted to $2.04.

In 2026, TRIN has mixed things up by joining the monthly distribution club. In the first 3 months of the year, management announced three $ 0.17-per-share dividends. On March 18, 2026, three further monthly dividends were promised through June 2026. The press release reminded readers right at the top:

TRIN dividend has remained consistent for more than six yearsTrinity Capital Press Release March 18,2026

As with SAR, our confidence is HIGH that the BDC will maintain this payout unchanged through 2026. According to analysts, recurring earnings per share will be $2.07 this year, “covering” the dividend commitment. Moreover, management has disclosed that its spillover amounts to $0.84 per share, more than enough to offset any unexpected earnings shortfall without cutting the dividend.

The picture is as good in 2027, going by what the analysts say. Again, the recurring earnings per share are estimated to be $2.07, unchanged from the current year. Given that estimate and the spillover income, and the clear commitment by the managers of this fast-growing BDC to “defend” its payout, our confidence that the $0.51 quarterly distribution will continue through next year is also HIGH.

We should also note that TRIN's stock trades at a premium to book - one of only 6 BDCs in that category right now. This is a strong incentive to keep the dividend unchanged so we can continue issuing new shares accretively.

Look out for the BDC Reporter’s promised Dividend Outlook Table, which we’re still compiling and that undertakes similar projections for all 45 public BDCs we cover. (Monroe Capital - MRCC - will not be featured, given its impending disappearance from the scene).

Bigger Picture

By our count, there are 21 BDCs - nearly half the universe - with a better than average chance of maintaining their regular dividend payouts in 2026. (We’re still working on our estimates for 2027.)  At a time of maximum gloom, where Private Credit - and BDCs - are concerned, this should serve as a useful reminder that matters are not as bad as they might seem where shareholder payments are concerned.