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Capital Southwest: Dual Beats, A Dividend Raise And Supplemental

Feb. 01, 2023 9:08 AM ETCapital Southwest (CSWC)43 Comments
Pacifica Yield profile picture
Pacifica Yield


  • Capital Southwest just reported a beat on both total and net investment income for its fiscal 2023 third quarter.
  • The BDC raised its regular dividend payment by 1.9% and paid out a $0.05 per share supplemental cash dividend.
  • Management expects the weighted average yield on debt investments to increase further from 12% in the coming quarters on the back of rising Fed fund rates.

Dallas skyline at dusk - the highrisers are all lit up

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Capital Southwest (NASDAQ:CSWC) just reported double beats on its fiscal 2023 third quarter earnings with a quarterly per share cash dividend payout of $0.53 declared. This was a 1.9% increase from the prior payout

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Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CSWC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (43)

elliot_mllr profile picture
I own CSWC in both my qualified plan and currently taxable accounts, and I was very pleased with its report two days ago. I cannot figure out why the stock is down today, given the strength of the company's ongoing operations. It is one of the best BDC investments, and if last Tuesday's results don't please the market I can't imagine what will.
Elliot Miller
@elliot_mllr I don't think that CSWC's stock price action is indicative or reflective of the intrinsic fundamentals of CSWC - as a company.
I think the general market is overvalued and since 3 out of 4 stocks tend to follow the general movement of the market indices - irrespective of specific fundamentals for that individual company, CSWC is simply following in that trajectory - in my opinion.
@elliot_mllr And when stocks like CSWC are down for no apparent reason that is known as a buying opportunity. I just added a bit to my position.
@elliot_mllr I think as short term rates keep heading higher, it puts increased pressure on portfolio holdings and credit concerns become important. Further, if the economy weakens then the portfolio companies could have a hard time in making higher interest payments. CSWC is also trading at a decent premium to its NAV.
I started a decent-sized position two days before the announcement - lucky (for once)!
I have been trimming my overweight position in CSWC and been adding to small positions in CION, CCAP, and RWAY.
Pablo profile picture
Seems like I chose the correct BDC's to beat the market. Nice choice!
The Dividend Collectuh profile picture
Love CSWC. One of my favorite BDC’s and holdings in my portfolio. Pretty heavy in them, probably gonna start trimming a few shares since the price is going up
I have been adding CSWC as it dropped and bounced back up over the past few months. I am now up about 6% not including dividends. With the dividend raise this stock certainly looks like a winner.
Why add? Happy to collect dividends and pursue other opportunities.
@Whathappens now Why add? Because we're waiting to hear your better opportunities elsewhere.
GBDC, FDUS to name a couple BDC'S. I like to some REIT'S and some midstream investments as well. Just like diversity and try not to go overweight in any particular area. I'll take dividends and invest in what I consider is best at the time. Rinse and repeat!
@Whathappens now Thanks. Consider cefs selling at a discount also. Have 50% in them. AOD FGB AVK RVT
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