Prospect Capital: Still Steering Clear For Now (Rating Upgrade)

(8min)

Summary

  • Prospect Capital's declining NAV and high concentration in a few large investments, like National Property REIT Corp., pose significant risks to stock performance.
  • The shift towards higher-quality debt assets, especially first lien senior secured debt, is a positive development that could reduce portfolio risk over time.
  • The recent dividend cut aligns payouts with net investment income, improving dividend sustainability despite a high percentage of payment-in-kind income.
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When I last reviewed Prospect Capital Corporation (NASDAQ:PSEC) 18 months ago, the company's declining net asset value (NAV) and concentration risks were key concerns. Since then, these issues have persisted, with NAV per share dropping further and substantial exposure to a few large investments, such as

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I am a young individual investor with a strong focus on long-term wealth creation. My investment strategy revolves around selecting stocks with strong growth potential as well as stocks with stable dividend yields. I firmly believe that patience is key, allowing my investments to compound over time. For me, dividends play a vital role in generating income and bolstering my overall portfolio value. I carefully select companies with strong fundamentals and a consistent history of dividend payouts. In my writing here, I principally focus on financial stocks including banks and BDCs.

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