Golub Capital: The 15% Dividend Cut May Not Be The Last

Golub Capital BDC remains under pressure, with sequential declines in portfolio value, NAV, and investment activity despite a recent 15% dividend cut. GBDC’s dividend coverage is tight at 103%, leaving little cushion; further deterioration in net investment income could prompt another cut within two to four quarters. Rising non-accruals, declining portfolio yields, and continued NAV erosion drive my continued sell rating, outweighing the appeal of the current 8% NAV discount and high yield. I require clear improvement in non-accrual trends and investment activity before considering an upgrade from sell, as current risks remain elevated.

Although a dividend cut isn't the end of the road most of the time, I try my best to avoid owning companies that have to reduce their dividend. Business development companies (BIZD) are generally viewed