Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - The recent market rally has led to total returns, but there are concerns about unrealized capital gains potentially disappearing as the market approaches bubble territory [2] - Dividends are highlighted as a reliable source of income that cannot be taken back, contrasting with the volatility of capital gains [2] Group 2 - The article emphasizes the importance of defensive stocks for medium- to long-term investment horizons [2]

Core Viewpoint - Capital Southwest Corporation has announced a public offering of $350 million in 5.950% notes due 2030, with a yield-to-maturity of 6.104% [1][2]. Group 1: Offering Details - The notes will mature on September 18, 2030, and can be redeemed at par plus a "make-whole" premium before August 18, 2030 [1]. - The offering price is set at 99.345% of the aggregate principal amount of the notes [1]. - The offering is expected to close on September 18, 2025, subject to customary closing conditions [1]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to redeem the outstanding 7.75% Notes due 2028 and 3.375% Notes due 2026 [2]. - A portion of the proceeds will also be used to repay outstanding indebtedness under the Corporate Credit Facility and/or the SPV Credit Facility [2]. - The company plans to re-borrow under these facilities to make investments aligned with its investment objectives and for general corporate purposes [2]. Group 3: Underwriters - Deutsche Bank Securities Inc., ING Financial Markets LLC, Morgan Stanley & Co. LLC, SMBC Nikko Securities America, Inc., and Wells Fargo Securities, LLC are acting as active bookrunners for the offering [3]. - Citizens JMP Securities, LLC and Raymond James & Associates, Inc. are serving as passive bookrunners [3]. - B. Riley Securities, Inc., Oppenheimer & Co. Inc., and UBS Investment Bank are co-managers for the offering [3]. Group 4: Company Overview - Capital Southwest Corporation is a Dallas-based business development company with approximately $1.8 billion in investments at fair value as of June 30, 2025 [7]. - The company focuses on middle market lending, supporting acquisitions and growth of businesses with investments ranging from $5 million to $50 million [7]. - As a public company with a permanent capital base, Capital Southwest has the flexibility to provide creative financing solutions [7].

Group 1 - The article emphasizes the importance of creating a portfolio that generates income without the need for selling assets, aiming to alleviate the stress of retirement investing [1] - It highlights the role of mortgage-backed securities in the US housing market, which support homeownership for millions of families [2] - The service offers features such as model portfolios with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and regular market updates, focusing on community and education [2] Group 2 - The article mentions that the contributors and analysts involved have beneficial long positions in specific securities, indicating a vested interest in the performance of those investments [3] - It notes that recommendations are closely monitored, with buy and sell alerts provided exclusively to members, suggesting a proactive investment strategy [4] - The article clarifies that past performance does not guarantee future results, and no specific investment advice is being given, highlighting the independent nature of the analysis [5]

Core Viewpoint - Capital Southwest Corporation has declared monthly regular dividends of $0.1934 per share for October, November, and December 2025, along with a quarterly supplemental dividend of $0.06 per share payable in December 2025 [1][2]. Dividend Details - The regular monthly dividends for the quarter ending December 31, 2025, are scheduled as follows: - October 31, 2025: $0.1934 per share [2] - November 28, 2025: $0.1934 per share [2] - December 31, 2025: $0.1934 per share [2] - The total regular dividends per share for the quarter will amount to $0.58, with the supplemental dividend adding an additional $0.06, leading to total dividends of $0.64 per share for the quarter [2]. Dividend Reinvestment Plan - Capital Southwest offers a Dividend Reinvestment Plan (DRIP) that allows registered stockholders to automatically reinvest dividends into additional shares of the company's common stock [3]. Company Overview - Capital Southwest Corporation is a Dallas-based business development company with approximately $1.8 billion in investments at fair value as of June 30, 2025 [4]. - The company focuses on middle market lending, providing investments ranging from $5 million to $50 million across various capital structures, including first lien, second lien, and non-control equity co-investments [4]. - As a public company with a permanent capital base, Capital Southwest has the flexibility to offer creative financing solutions and support the long-term growth of its portfolio companies [4].

Group 1 - Business Development Companies (BDCs) are increasingly becoming integral to income investment strategies, previously viewed as riskier investments but gaining traction among investors in recent years [1] - The sector represented by BDCs, indicated by the BIZD ticker, has shown growth and acceptance among investors [1] Group 2 - The article emphasizes the importance of due diligence for investors, highlighting that the author is not a registered investment professional or financial advisor [2] - The author aims to assist lower and middle-class workers in building investment portfolios focused on high-quality, dividend-paying companies [2]

Group 1 - The article discusses investment opportunities in two Business Development Companies (BDCs): Great Elm Capital Corporation (NASDAQ: GECC) and Capital Southwest [1] - The focus is on investments that can yield good profits in a short time frame [1] - The investing group Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, and hedging strategies [1] Group 2 - The article emphasizes the importance of active investor participation and provides a platform for discussion among sophisticated traders and investors [1] - There is a mention of a beneficial long position in the shares of GECC, indicating a positive outlook on the stock [1]

Treading Softly, Beyond Saving, Philip Mause, and Hidden Opportunities, all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members. 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 inv ...

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements for Capital Southwest Corporation for the quarter ended June 30, 2025, are presented [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets marginally decreased to $1.88 billion, while net assets increased to $916.5 million as of June 30, 2025 Consolidated Balance Sheet Highlights (in thousands, except per share data) | Metric | June 30, 2025 (Unaudited) | March 31, 2025 | | :--- | :--- | :--- | | **Total Investments (at fair value)** | $1,780,198 | $1,785,299 | | **Total Assets** | $1,882,412 | $1,882,840 | | **Total Liabilities** | $965,938 | $999,207 | | **Total Net Assets** | $916,474 | $883,633 | | **Net Asset Value per Share** | $16.59 | $16.70 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Total investment income increased to $55.9 million, with net assets from operations rising to $27.0 million for the quarter ended June 30, 2025 Quarterly Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total Investment Income** | $55,947 | $51,354 | | **Total Operating Expenses** | $23,230 | $20,068 | | **Net Investment Income** | $31,889 | $28,859 | | **Net Realized Gain on Investments** | $15,704 | $711 | | **Net Unrealized Depreciation on Investments** | $(20,592) | $(15,535) | | **Net Increase in Net Assets from Operations** | $27,001 | $14,035 | | **Net Increase in Net Assets from Operations – Basic EPS** | $0.50 | $0.31 | [Consolidated Statements of Changes in Net Assets](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets increased by $32.8 million to $916.5 million, driven by operations and stock issuance, partially offset by dividends for the quarter Reconciliation of Net Assets (in thousands) | Description | Amount | | :--- | :--- | | **Net Assets at March 31, 2025** | **$883,633** | | Issuance of common stock | $41,172 | | Dividends to shareholders | $(35,344) | | Net investment income | $31,889 | | Net realized gain on investments | $15,704 | | Net unrealized depreciation on investments | $(20,592) | | Other (Share-based comp, etc.) | $12 | | **Net Assets at June 30, 2025** | **$916,474** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $30.5 million, with a net increase in cash of $3.7 million, ending the quarter at $48.5 million Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | | :--- | :--- | | **Net Cash Provided by Operating Activities** | $30,493 | | **Net Cash Used in Investing Activities** | $(141) | | **Net Cash Used in Financing Activities** | $(26,684) | | **Net Increase in Cash** | $3,668 | | **Cash, Cash Equivalents and Restricted Cash at End of Period** | $48,539 | [Consolidated Schedule of Investments](index=9&type=section&id=Consolidated%20Schedule%20of%20Investments) The investment portfolio totaled $1.78 billion across 122 companies, with debt investments comprising 90.7% as of June 30, 2025 Portfolio Composition by Investment Type at June 30, 2025 (in thousands) | Investment Type | Fair Value | % of Total Portfolio | | :--- | :--- | :--- | | First lien loans | $1,595,338 | 89.6% | | Second lien loans | $17,383 | 1.0% | | Subordinated debt | $1,264 | 0.1% | | Preferred equity | $66,230 | 3.7% | | Common equity & warrants | $96,526 | 5.4% | | Earnout | $3,457 | 0.2% | | **Total** | **$1,780,198** | **100.0%** | Top 5 Industry Concentrations at June 30, 2025 (by Fair Value) | Industry | Fair Value (in thousands) | % of Total Portfolio | | :--- | :--- | :--- | | Healthcare Services | $207,499 | 11.7% | | Consumer Products | $156,589 | 8.8% | | Media & Marketing | $147,986 | 8.3% | | Consumer Services | $130,230 | 7.3% | | Food, Agriculture & Beverage | $123,570 | 7.0% | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, investment valuation, debt facilities, and unfunded commitments, highlighting BDC and RIC status - The company operates as an internally managed Business Development Company (BDC) and has elected to be treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes[116](index=116&type=chunk) - As of June 30, 2025, investments on non-accrual status represented approximately **0.8% of the total investment portfolio at fair value** and **2.6% at cost**[136](index=136&type=chunk) - As of June 30, 2025, the company had total unfunded commitments of **$223.0 million**, consisting of **$222.4 million in debt** and **$0.5 million in equity**[257](index=257&type=chunk)[259](index=259&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=99&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses performance, financial condition, and capital resources, noting a 10.5% increase in net investment income and strong liquidity Quarterly Performance Summary | Metric | Q1 FY2026 (ended Jun 30, 2025) | Q1 FY2025 (ended Jun 30, 2024) | Change | | :--- | :--- | :--- | :--- | | **Total Investment Income** | $55.9M | $51.4M | +8.9% | | **Net Investment Income** | $31.9M | $28.9M | +10.5% | | **Net Increase in Net Assets from Operations** | $27.0M | $14.0M | +92.4% | - The increase in investment income was primarily due to a **21.7% increase in the average cost basis of debt investments** held year-over-year, from **$1.38 billion to $1.67 billion**[310](index=310&type=chunk) - As of June 30, 2025, the company had **$46.9 million in unrestricted cash** and **$397.2 million of unused capacity** under its Credit Facilities[324](index=324&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=112&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate risk, with 96.3% of the debt portfolio at floating rates, and sensitivity analysis provided - As of June 30, 2025, approximately **96.3% of the company's debt investment portfolio at fair value** bore interest at floating rates, with **100% of these subject to contractual minimum interest rate floors**[347](index=347&type=chunk) Interest Rate Sensitivity Analysis (as of June 30, 2025) | Basis Point Change | Increase (decrease) in Net Investment Income (in thousands) | Increase (decrease) in Net Investment Income per Share | | :--- | :--- | :--- | | (200 bps) | $(25,548) | $(0.46) | | (100 bps) | $(12,807) | $(0.23) | | 50 bps | $6,403 | $0.12 | [Item 4. Controls and Procedures](index=114&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The President and Chief Executive Officer and the Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of June 30, 2025[350](index=350&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[351](index=351&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=115&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no currently pending material legal proceedings - The company has no currently pending material legal proceedings[353](index=353&type=chunk) [Item 1A. Risk Factors](index=115&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[354](index=354&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=115&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No sales of unregistered securities or share repurchases occurred during the quarter ended June 30, 2025 - There were no sales of unregistered securities during the quarter[355](index=355&type=chunk) - The company did not repurchase any shares under its share repurchase program during the three months ended June 30, 2025[356](index=356&type=chunk) [Item 3. Defaults Upon Senior Securities](index=115&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities during the period - None[357](index=357&type=chunk) [Item 4. Mine Safety Disclosures](index=115&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[358](index=358&type=chunk) [Item 5. Other Information](index=115&type=section&id=Item%205.%20Other%20Information) No other material information or director/officer trading plans were reported during the period - No director or officer entered into any Rule 10b5-1 trading plans or other trading arrangements during the quarter[360](index=360&type=chunk) [Item 6. Exhibits](index=116&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, indentures, and required certifications

Financial Data and Key Metrics Changes - The company reduced the investment portfolio weighted average debt to EBITDA from 3.5 times to 3.4 times [4] - The investment revenue pick rate decreased from 7.6% to 5.8% [4] - The non-accrual rate improved from 1.7% to 0.8% of the investment portfolio at fair value [4] - Pre-tax net investment income was reported at $0.61 per share, with total investment income increasing to $55.9 million from $52.4 million in the prior quarter [18] - The company's NAV per share decreased from $16.70 to $16.59 [21] Business Line Data and Key Metrics Changes - The company generated $27.2 million in realized gains from two equity investment exits during the quarter [5] - The on-balance sheet credit portfolio grew year-over-year by 21% to $1.6 billion [10] - 100% of new portfolio company debt originations were first lien senior secured [10] - The equity co-investment portfolio consisted of 80 investments with a total fair value of $166 million, representing 9% of the total portfolio [12] Market Data and Key Metrics Changes - The company reported $115 million in total new commitments to three new portfolio companies and 12 existing portfolio companies [6] - Approximately 55% of total capital commitments during the quarter were follow-on offerings in performing portfolio companies [7] - The company noted a distinct pickup in the volume and quality of deals in the past six weeks [8] Company Strategy and Development Direction - The company transitioned its regular dividend payment frequency from quarterly to monthly, declaring a total of $0.58 in regular dividends for the quarter [5] - The company received final approval from the SBA for its second SBIC license, allowing access to $175 million in additional SBA debentures [6] - The company aims to maintain a conservative leverage approach while being opportunistic in raising secured and unsecured debt capital [23] Management's Comments on Operating Environment and Future Outlook - Management noted a competitive landscape in the lower middle market, with banks and non-bank lenders being aggressive in deploying capital [26] - The company anticipates significant activity in terms of new platform company originations and add-on activity in the existing portfolio [8] - Management expressed confidence in maintaining dividends based on the current UTI balance of $1 per share and expectations of continued gains from the equity portfolio [20] Other Important Information - The company reported a robust balance sheet liquidity with approximately $444 million in cash and undrawn leverage commitments [21] - The regulatory leverage ended the quarter at a debt to equity ratio of 0.82 to 1, down from 0.89 to 1 in the prior quarter [23] Q&A Session Summary Question: Can you talk about the competitive landscape right now? - Management noted a supply-demand dynamic with a scarcity of quality assets and aggressive competition from banks and non-bank lenders [26][27] Question: What underpins your optimism in the M&A market? - Management highlighted a strong pipeline with $110 million of originations already closed and additional deals pending [36][37] Question: What is the outlook on operating leverage? - Management indicated that operating leverage is expected to trend down to 1.4% to 1.5% by the end of the fiscal year [40][41] Question: How do you view the competitive pressure from banks? - Management acknowledged that banks are currently competitive, which is driving lower spreads, but noted that this could change [52][53] Question: Any updates on adding an asset manager vehicle within the BDC? - Management confirmed ongoing efforts to enhance earnings and origination capabilities, potentially through strategic initiatives [56] Question: Can you provide a breakout between new versus add-on opportunities? - Management indicated a robust quarter with approximately 75% of originations being new opportunities [62]

Financial Highlights - Q1 2026 Pre-Tax Net Investment Income ("NII") was $32.7 million, or $0.61 per share[16] - Net realized gains of $27.2 million were generated from the exit of two equity investments[16] - Undistributed Taxable Income ("UTI") increased to $1.00 per share as of June 30, 2025, from $0.79 per share as of March 31, 2025[16] - The investment portfolio at fair value was approximately $1.8 billion[16] - Net Asset Value per share was $16.59[16] Investment Activity - CSWC originated $115.2 million in total new committed investments during the quarter, with $63.9 million funded at close[17] - New committed investments consisted of $113.4 million in first lien debt and $1.8 million in equity[17] - Total proceeds of $80.6 million were generated from the exit of three debt investments and two equity investments, including net realized gains of $27.1 million[17] - Cumulative weighted average IRR of 13.6% on 101 portfolio company exits, generating $1.2 billion in proceeds since launch of credit strategy in January 2015[17] Portfolio Composition - First lien investments accounted for 89.6% of the portfolio at fair value as of June 30, 2025[20, 32] - Equity investments accounted for 9.3% of the portfolio at fair value as of June 30, 2025[20, 32] - Approximately 92% of all debt investments are currently rated a "1" or "2"[22]