Capital Southwest: Strong Resilience Through Uncertainty

Summary

• I maintain my buy rating on CSWC due to its attractive valuation, high-quality portfolio, and strong dividend coverage, despite recent price declines.
• CSWC's portfolio is well-diversified, focused on senior secured first lien debt, and benefits from high floating-rate exposure in a higher-rate environment.
• Dividend yield remains enticing at 12%, now paid monthly, with ample undistributed taxable income supporting continued stable payouts and supplemental dividends.
• Risks include tariff impacts and slightly elevated non-accruals, but CSWC's solid liquidity and proactive management position it well for long-term investors.

Klaus Vedfelt

Overview

Business Development Companies remain one of my favorite places to collect a high dividend yield because of their ability to capitalize on the higher interest rate environment. I previously covered Capital Southwest (NASDAQ:CSWC) and issued

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within 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.