Gladstone Investment Corporation (NASDAQ:GAIN), sister company to Gladstone Capital (NASDAQ:GLAD) announced an unchanged distribution of 4 cents a month through March 2010. The distribution is unchanged since GAIN cut its dividend in the wake of de-leveraging and changing its banking group.
The stable dividend notwithstanding, we continue to be concerned about the sustainability of the Company’s distribution at this level, especially as the financing structure of GAIN remains up in the air. Also, assets have been dropping as GAIN sells off its syndicated loans and receives other unscheduled repayments. In the last quarter Net Investment Income Per Share was already down to 11 cents a share, slightly below the 12 cents a share in announced dividends. Unless GAIN either spikes up its yield or starts adding new assets it’s hard to see how income can do anything but drop in the next quarter or two.
We have a Red Flag Watch for GAIN’s dividend (i.e. we’re concerned that a cut is coming over the next 12 months).
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