Carlyle Secured Lending: Trades At A Premium But For Good Reason (Rating Downgrade)

Cain Lee
5.98K Followers
(13min)

Summary

  • I am downgrading my rating on Carlyle Secured Lending to a hold due to its current premium to NAV, making it less attractive for new positions.
  • CGBD's portfolio strength, high dividend yield of 10.3%, and reduced non-accrual rate contribute to its solid outperformance compared to peer BDCs.
  • Despite mixed financial results, CGBD's portfolio operates on a floating rate basis, benefiting from higher interest rates but facing potential challenges with anticipated rate cuts.
  • While the dividend is well-supported, future supplemental distributions may decrease as net investment income growth slows, making CGBD best suited for tax-advantaged accounts.
Pink Piggy Bank Isolated on Yellow Background with Hundred Dollar Bill

skodonnell

Overview

When I previously covered Carlyle Secured Lending (NASDAQ:CGBD) I issued a buy rating due to the recent merger that helped boost total value, solid investment performance, and strong dividend coverage. Now that we have crossed into 2025, I wanted to reassess

This article was written by

5.98K Followers
Financial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 15 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering high quality dividend stocks and other assets that offer potential for long term-growth that pack a serious punch for bill-paying potential. I use myself as an example that with a solid base of classic dividend growth stocks, sprinkling in some Business Development Companies, REITs, and Closed End Funds can be a highly efficient way to boost your investment income while still capturing a total return that follows traditional index funds. I create a hybrid system between growth and income and manage to still capture a total return that is on par with the S&P.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CGBD over the next 72 hours. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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