Welcome to Cash Flow Venue, where we discuss dividend investing opportunities, as they allowed me to build another pillar od my financial life and I believe it's the most accessible way to seek financial freedom.I'm a finance professional with extensive experience in M&A and business valuation. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put o ...

olm26250/iStock via Getty Images Since BDCs distribute almost all of its earnings in dividends and employ high amounts of external leverage to fund investments that provide a decent spread from the cost of debt, this specific asset class is quite attractive for high-yield seeking investors. An additional layer, which renders BDCs interesting is that in contrast to pure fixed income securities or preferred shares, where decent yields could be found as well, by investing in BDCs investors can access a slight ...

Core Viewpoint - Fidus Investment (NASDAQ:FDUS) is positioned as a strong investment opportunity due to its durable cash flow and a robust portfolio in defensive industries, allowing for sustainable base dividends even in challenging market conditions [1][5] Financial Performance - In Q2 2024, FDUS expanded its adjusted net investment income (NII) by approximately 18% year-over-year, but the adjusted NII per share decreased to $0.57, down $0.05 from Q2 2023 [3] - The net asset value (NAV) per share increased by $0.14 from the previous quarter and $0.37 from Q2 2023, indicating positive underlying asset performance [3] Challenges - The decline in adjusted NII per share is attributed to spread compression in the BDC sector, with a drop of around 20 basis points over the past three quarters [3] - Equity dilution from additional at-the-market (ATM) issuances has pressured per-share results, leading to underleveraged balance sheets and surplus liquidity [3][4] Growth Prospects - FDUS has the lowest leverage profile in the BDC space, with a debt-to-equity ratio of 0.5 times, which is seen as a temporary issue that provides liquidity for portfolio growth [4] - New investment funding for Q2 2024 totaled approximately $62 million, with a focus on first lien securities, which now make up 71% of the portfolio [4] Dividend and Credit Quality - The base dividend coverage remains strong at 132%, with an attractive yield of 8.9%, and a forward annualized yield of approximately 12.2% when including supplemental dividends [4] - The portfolio's credit quality is robust, with non-accruals under 1% of total portfolio value, and no first lien-related non-accruals since 2019 [4] Investment Case - Despite surface-level negative results in Q2 2024, the underlying dynamics of growth and portfolio quality remain solid, making FDUS a reliable option for income-seeking investors [5]

Financial Data and Key Metrics Changes - Adjusted net investment income for Q2 2024 grew 17.7% to $18.4 million compared to $15.6 million in the same period last year, primarily due to higher interest income [5][10] - Net asset value increased to $646.8 million, a 9.7% rise from $589.5 million as of December 31, 2023, with a per share value of $19.50 compared to $19.37 [6][12] - Total investment income was $35.7 million for Q2 2024, a $1 million increase from Q1 2024, driven by a $3.2 million rise in interest income [10] Business Line Data and Key Metrics Changes - Originations totaled $62.4 million in Q2, including $17.8 million in one new portfolio company, with follow-on investment activity amounting to $44.6 million [6] - Equity investments totaled $4.3 million, continuing co-investment in portfolio companies [6] Market Data and Key Metrics Changes - The portfolio grew to $1.1 billion on a fair value basis, consisting of a debt portfolio of $945.7 million and an equity portfolio of $132.7 million [7][12] - The weighted average yield on debt investments remained at 14% as of June 30, 2024 [12] Company Strategy and Development Direction - The company remains focused on the lower middle market, seeking opportunities that meet strict underwriting standards and investing in businesses with strong cash flow [8] - The strategy includes maintaining a high degree of equity cushion in debt investments to ensure both current income and potential enhanced returns [8] Management's Comments on Operating Environment and Future Outlook - Management expects deal flow and M&A activity to remain reasonable for the remainder of the year, with a potential increase in repayments as portfolio companies evaluate strategic alternatives [8][19] - The overall portfolio remains healthy, with 65% of companies growing their cash flow or EBITDA [24] Other Important Information - The company declared dividends totaling $0.57 per share for Q3 2024, consisting of a base dividend of $0.43 and a supplemental dividend of $0.14 [5] - Liquidity as of June 30 included cash of $48.3 million and $67 million available on the line of credit, totaling approximately $115.8 million [13] Q&A Session Summary Question: Update on capital structure and liquidity profile - Management expressed confidence in the SBIC license process and noted the benefits of the expanded revolving credit facility and investment grade rating [16][17] Question: Outlook for the second half of the year - Management indicated expectations for a pickup in M&A activity and new platform investments, despite a slower Q2 [18][19] Question: Dynamics of repayments and refinancing activity - Management highlighted that several portfolio companies are evaluating strategic alternatives, with some seeking refinancing opportunities [21][22] Question: Credit quality concerns amid economic pressures - Management reported strong portfolio performance, with a focus on high free cash flow companies, and noted that 65% of companies grew cash flow or EBITDA [24][25] Question: Activity in non-sponsored deals - Management confirmed ongoing interest in non-sponsored deals but emphasized that the majority of current opportunities are still in sponsored deals [28][29]

Fidus Investment (FDUS) came out with quarterly earnings of $0.57 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.62 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this closed-end investment company would post earnings of $0.59 per share when it actually produced earnings of $0.59, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Fidus Investme ...

Core Viewpoint - Fidus Investment Corporation reported its financial results for the second quarter of 2024, highlighting a total investment income of $35.7 million and a net investment income of $17.0 million, or $0.53 per share, with a declared dividend of $0.57 per share for the third quarter of 2024 [1][2][12]. Financial Highlights - Total investment income for Q2 2024 was $35.7 million, a 16.7% increase from $30.6 million in Q2 2023 [2][4]. - Net investment income was $17.0 million, reflecting a slight increase of 1.0% from $16.8 million in the same period last year [2][7]. - Adjusted net investment income was $18.4 million, or $0.57 per share, up 17.7% from $15.6 million, or $0.62 per share, in Q2 2023 [2][7][27]. - The company declared a total dividend of $0.57 per share for Q3 2024, consisting of a base dividend of $0.43 and a supplemental dividend of $0.14 [1][12]. Investment Activity - Fidus invested $62.4 million in debt and equity securities during the quarter, including one new portfolio company [2][10]. - The company realized net gains of $9.2 million from the monetization of two equity investments [2][8]. Portfolio Overview - As of June 30, 2024, the fair value of the investment portfolio was $1,078.4 million, consisting of 86 active portfolio companies [2][9]. - The weighted average yield on debt investments was 14.0% [2][9]. Expenses and Liabilities - Total expenses for Q2 2024 were $18.7 million, a 35.9% increase from $13.8 million in Q2 2023, primarily due to higher interest and financing expenses [2][6]. - The company had $48.3 million in cash and cash equivalents and $67.5 million of unused capacity under its senior secured revolving credit facility as of June 30, 2024 [2][11]. Subsequent Events - On July 2, 2024, Fidus exited its debt investment in Aldinger Company, receiving full payment of $23.1 million [2][15]. - An incremental commitment agreement increased the total commitments available under the Credit Facility from $100.0 million to $140.0 million [2][15].

EVANSTON, Ill., July 25, 2024 (GLOBE NEWSWIRE) -- Fidus Investment Corporation (NASDAQ: FDUS) ("Fidus" or the "Company") today announced that it will report its second quarter 2024 financial results on Thursday, August 1, 2024 after the close of the financial markets. Company Contact: Investor Relations Contact: Shelby E. Sherard LHA Investor Relations Chief Financial Officer Jody Burfening Fidus Investment Corporation (212) 838-3777 (847) 859-3938 JBurfening@lhai.com Management will host a conference call ...

da-kuk YCharts Thesis review The bottom line I have been covering Fidus Investment (NASDAQ:FDUS) since December last year, when I issued my first bullish article on this business development company, or BDC. Since then, I have circulated a follow-up article assessing the Q4, 2023 results, where the conclusion was also clear - i.e., to maintain a buy rating. On a YTD basis, FDUS has delivered positive total returns, but to a lower extent as the overall BDC market. All in all, this is fairly logical given tha ...

PM Images Fidus Investment Corporation (NASDAQ:FDUS) is a well-managed business development company that has earned a reputation for distributing a large amount of special dividends to shareholders in the last year. The company's core dividend pay-out ratio in the first quarter was well below 100% and Fidus Investment's net asset value remained, despite the distribution of a considerable amount of portfolio income to shareholders, stable on a YoY basis. I think that Fidus Investment continues to make a comp ...

John M Lund Photography Inc/DigitalVision via Getty Images Overview When investing into business development companies, I tend to focus on how sustainable the high yield is. After all, the high yield is the main appeal as I use BDCs to prioritize and add income to my portfolio. I came across SLR Investment Corp (NASDAQ:SLRC) this past weekend and wanted to see if it met my standards. For me to consider a BDC, they have to meet the following criteria: Diverse portfolio of investments across different sector ...