June 17, 2013: Mid-sized, Collateralized Loan Obligation ("CLO") managing KCAP Financial ("KCAP") announced a IIQ 2013 dividend of $0.28, unchanged from the prior period.
BDC REPORTER'S TWO CENTS: No great surprise here. KCAP kept the dividend unchanged, because earnings were a bit behind the distribution in the IQ 2013, and the Company recently raised additional new equity and issued more shares. On the other hand, earnings are still headed upwards thanks to a new CLO launched a few days ago, and additional earnings about to hit the P&L from an earlier CLO. (A quick word about the quirks of CLOs for the issuer: there's usually a delay between the launch of a CLO and when the investor in the equity tranche of the instrument starts earning the big bucks. KCAP is about to get the benefit of one CLO launch and will get the other in the third quarter of 2013).
The Analyst Consensus is for $1.07 in Earnings Per Share in 2013, and $1.15 in 2014, from $0.89 in 2012. (EPS here is Net Investment Income Per Share, not including Realized and Unrealized Gains).
OUTLOOK FOR THE DIVIDEND: We believe the Analyst Consensus is low longer term, even though profits in the CLO market are harder to come by. So we're expecting profits to overshoot the consensus. Likewise, we expect the Company will be increasing the dividend modestly in the next couple of quarters.
Disclosure: I am long KCAP.