Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - The strategy aims to create a balanced portfolio that captures total returns on par with the S&P 500, demonstrating the effectiveness of blending growth and income investments [1].

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Group 1: Investment Strategy - The company advocates for a diversified approach to investing, focusing on high-quality dividend stocks that provide long-term growth potential [1]. - A hybrid system is proposed, blending growth and income strategies to optimize investment returns [1]. - The total return achieved through this strategy is reported to be on par with the S&P index, indicating its effectiveness [1].

New Mountain Finance Corporation (NASDAQ:NMFC)⁠ is included among the 15 Stocks with Highest Dividend to Invest in. B. Riley Maintains Neutral Rating on NMFC, Lowers Price Target to $10 Photo by Vitaly Taranov on Unsplash On Nov‌ember 5, B.⁠ Ri‍le‍y l⁠owered it‌s price target on New Mountain Finance Corporation (NASDAQ:NMFC)⁠ t⁠o $10 from $11 and maintained a Neutral rating on the stock f‌o‍llow‍ing t‌he Q3 results, as reported by The Fly. The analyst noted that the company’s raw earnings fell short of ...

Financial Data and Key Metrics Changes - Adjusted net investment income for Q3 2025 was $0.32 per share, covering the $0.32 per share dividend paid on September 30 [5] - Net asset value per share declined by $0.15 compared to Q2, now at $12.06, due to modest declines across four investments [5][15] - Total investment income for the quarter was $80 million, a 4% decrease compared to the prior quarter [26] - Total net expenses decreased by 5% to $47 million, including a fee waiver [27] Business Line Data and Key Metrics Changes - NMFC's portfolio loan-to-value stands at 45%, with a focus on defensive growth sectors such as healthcare and IT [6][24] - Senior-oriented assets increased to 80% of the overall portfolio, up from 78% in the prior quarter [12][23] - The average yield of NMFC's portfolio decreased slightly to 10.4% due to lower yields on originations compared to repayments [24] Market Data and Key Metrics Changes - The direct lending market remains attractive, with stable spreads despite a lack of significant M&A activity [19][20] - Most unitranche loans are pricing at SOFR plus 450-500 range, indicating a stable pricing environment [20] - Approximately 80% of investments are senior in nature, reflecting a shift towards lower-risk assets [23] Company Strategy and Development Direction - NMFC aims to improve the quality and diversity of its asset base while optimizing liabilities and enhancing income quality [12] - The company is exploring a portfolio sale of up to $500 million to diversify its portfolio and reduce PIK income [7][8] - NMFC's management emphasizes shareholder alignment, with 14% of outstanding shares owned by employees and senior advisors [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the deal environment improving in Q4 and 2026, with expectations of increased repayments [36] - The company remains committed to maintaining leverage within a target range of 1 to 1.25 [26][36] - Management is focused on reversing unrealized depreciation within the existing portfolio and recovering full principal value on challenged investments [17][58] Other Important Information - NMFC has fully utilized a $50 million stock repurchase program, repurchasing approximately $47 million in shares at an average price of $10 [7] - The company has a diversified portfolio across 127 companies, with the top 10 single-name issuers accounting for 26% of total fair value [25] Q&A Session Summary Question: Regarding the potential portfolio sale - The sale will focus on the largest positions to diversify the portfolio and reduce PIK income, including both PIK and cash-yielding names [34] Question: On the buyback strategy - The company aims to stay within leverage levels while potentially using repayments to buy back stock if conditions allow [36] Question: About deployment capacity and strategy - NMFC remains active in the market but is prioritizing share repurchases due to leverage considerations [41] Question: On the potential secondary sale and use of proceeds - Proceeds could be used for debt repayment, stock repurchases, or new loans to diversify the portfolio [44] Question: Concerns about other portfolio positions affected by tariffs - The portfolio is well-positioned against tariff impacts, with Beauty Industry Group being the only significant exposure [55] Question: On the performance of Admentum - Admentum's performance is stable, and the company is working on targeted M&A to grow the business [67]

Financial Performance - Q3 2025 adjusted net investment income (NII) was $032 per share, covering the dividend of $032 per share[12] - September 30, 2025 net asset value (NAV) was $1206 per share, compared to $1221 per share as of June 30, 2025[12] - The company repurchased approximately $47 million of NMFC shares year-to-date at a weighted average purchase price of $1002 per share[12] - The company announced a new $100 million board authorized share buyback program[12] Portfolio Composition and Risk - Approximately 95% of the portfolio is rated green on the company's heatmap[12] - Approximately 80% of the portfolio is senior in nature, including First Lien, SLPs, and Net Lease[12] - The fair value of investments was $29571 million as of September 30, 2025[14] - The current yield at cost was 110% and the yield to maturity (YTM) at cost was 104%[14] Strategic Initiatives - The company is exploring a secondary portfolio sale of up to $500 million of assets to a third party to further strategic initiatives[12] - New Mountain employees continue to be the largest shareholders of the company, with ownership of approximately 14%[12]

Financial Position - As of September 30, 2025, the company's net asset value was approximately $1,256.6 million, with a portfolio fair value of approximately $2,943.6 million across 126 portfolio companies[430]. - The company raised approximately $1,034.6 million in net proceeds from additional offerings of common stock since its IPO[422]. - As of September 30, 2025, the asset coverage ratio was 179.1%, allowing the company to borrow $2 for every $1 of equity[506]. - The company had outstanding commitments to fund investments totaling $255.9 million as of September 30, 2025[512]. - Total contractual obligations amount to $1,784.1 million, with $476.7 million due in less than 1 year[518]. - Cash and cash equivalents were approximately $63.7 million as of September 30, 2025, down from $80.3 million as of December 31, 2024[508]. Investment Performance - The weighted average yield to maturity at cost for income-producing investments was approximately 10.4%, while the overall yield to maturity at cost for all investments was approximately 10.0%[430]. - As of September 30, 2025, the fair value of the company's investments was approximately $2,943.6 million across 126 portfolio companies, down from approximately $3,091.0 million in 120 portfolio companies at December 31, 2024[492]. - Total investment income for the three months ended September 30, 2025, was approximately $80.5 million, a decrease of about $14.8 million or 16% compared to $95.3 million for the same period in 2024[494]. - For the nine months ended September 30, 2025, total investment income was approximately $249.7 million, reflecting a decrease of about $30.8 million or 11% from $280.5 million in the same period in 2024[499]. - The company reported net realized and unrealized losses of approximately $21.7 million for the three months ended September 30, 2025, compared to a net loss of approximately $11.5 million for the same period in 2024[496]. - Net realized gains on investments were $51.2 million for the nine months ended September 30, 2025, compared to net realized losses of $43.5 million for the same period in 2024[501]. - The company reported a net loss of approximately $59.5 million for the nine months ended September 30, 2025, compared to a net loss of $24.6 million for the same period in 2024[501]. Portfolio Composition - As of September 30, 2025, the top five industry concentrations in the company's portfolio were software, business services, healthcare, investment funds, and consumer services[429]. - The company primarily invests in senior secured debt of U.S. sponsor-backed middle market companies, defined as those with annual EBITDA of $10 million to $200 million[428]. - SLP III had total investments with an aggregate fair value of approximately $758.0 million, up from $715.1 million as of December 31, 2024[458]. - SLP IV had total investments with a fair value of approximately $525.3 million, up from $469.3 million as of December 31, 2024, representing a growth of 11.5%[466]. - The number of portfolio companies in SLP III decreased slightly to 89 from 90 year-over-year[459]. - The number of portfolio companies in SLP IV increased to 87 as of September 30, 2025, compared to 79 as of December 31, 2024, indicating a growth of 10.1%[467]. Debt and Financing - On October 15, 2025, the company repaid the outstanding principal of $258.7 million on the 2022 Convertible Notes[433]. - The board of directors authorized a stock repurchase program of up to $100.0 million, expected to be in place until December 31, 2026, or until the full amount is repurchased[434]. - The company entered into a Third Amended and Restated Uncommitted Revolving Loan Agreement, extending the maturity date from December 31, 2027, to December 31, 2030[435]. - SLP IV's maximum borrowing capacity was increased to $600.0 million as of July 11, 2025, up from $370.0 million prior to the amendment[465]. - The Holdings Credit Facility had outstanding borrowings of $308.1 million as of September 30, 2025, with approximately $421.9 million of available capacity remaining[514]. Interest Rate Exposure - Approximately 85.39% of the company's investments at fair value are floating-rate investments, while 14.61% are fixed-rate investments as of September 30, 2025[531]. - The company's senior secured revolving credit facilities are subject to floating interest rates based on SOFR, SONIA, or EURIBOR rates[531]. - A decrease of 200 basis points in interest rates could lead to a 15.77% reduction in interest and dividend income net of interest expense[534]. - An increase of 200 basis points in interest rates could result in a 15.77% increase in interest and dividend income net of interest expense[534]. - The potential impact of interest rate changes on net investment income is significant, with a high interest rate environment potentially increasing income[531]. - A prolonged low interest rate environment could compress the difference between interest income and interest expense, adversely affecting operating results[531]. Distributions and Dividends - Distributions declared and paid to stockholders for the nine months ended September 30, 2025, totaled approximately $102.8 million[519]. - The company declared a total of $0.96 per share in distributions for the fiscal year ended December 31, 2025[519]. - For the fiscal year ended December 31, 2024, total distributions were $147.2 million, with 75.68% classified as ordinary income[519]. - The company has a dividend reinvestment plan allowing stockholders to reinvest cash distributions in additional shares[522]. - The company intends to distribute approximately all of its net investment income on a quarterly basis and substantially all of its taxable income annually[521]. Management and Fees - Management fees for the three months ended September 30, 2025, totaled $9.6 million, down from $10.7 million in the same period in 2024, primarily due to a lower invested asset base[495]. - The company has entered into a fee waiver agreement with the Investment Adviser, reducing management fees through December 31, 2024[525].

Financial Performance - Net investment income for Q3 2025 was $33.9 million, or $0.32 per weighted average share, compared to $0.33 per share in Q3 2024[3] - Total investment income for the three months ended September 30, 2025, was $80,529,000, down 15.5% from $95,327,000 for the same period in 2024[24] - Net investment income before income taxes for the nine months ended September 30, 2025, was $103,286,000, compared to $111,734,000 for the same period in 2024, reflecting a decrease of about 7.6%[24] - Basic earnings per share for the three months ended September 30, 2025, was $0.11, down from $0.22 in the same period of 2024, a decline of 50%[25] - Net increase in net assets resulting from operations related to New Mountain Finance Corporation was $12,189,000 for the three months ended September 30, 2025, compared to $23,889,000 for the same period in 2024, a decrease of about 49.1%[25] Asset and Liability Management - The net asset value (NAV) per share decreased to $12.06 as of September 30, 2025, from $12.21 as of June 30, 2025[5] - Total assets decreased to $3,088,909,000 as of September 30, 2025, from $3,246,701,000 as of December 31, 2024, representing a decline of approximately 4.9%[21] - Total liabilities decreased to $1,826,243,000 as of September 30, 2025, from $1,887,410,000 as of December 31, 2024, a reduction of approximately 3.2%[21] - The net asset value per share of New Mountain Finance Corporation was $12.06 as of September 30, 2025, compared to $12.55 as of December 31, 2024, a decrease of about 3.9%[21] Investment Portfolio - Approximately 95% of the investment portfolio is rated green, indicating strong performance[5] - The investment portfolio had a fair value of $2,957.1 million, with investments in 127 portfolio companies[6] - The company increased its senior-oriented asset mix to 80%, up from 75% as of September 30, 2024[5] - The company is exploring a secondary portfolio sale of up to $500 million of assets to enhance financial flexibility and diversify the portfolio[5] Dividends and Shareholder Returns - The annualized dividend yield increased to 13.2% in Q3 2025, compared to 11.9% in Q3 2024[3] - The company declared a fourth quarter 2025 distribution of $0.32 per share, payable on December 31, 2025[5] - A new stock repurchase plan was established, authorizing the repurchase of up to $100 million worth of common shares, doubling the capacity of the original plan[5] Expenses and Losses - Total expenses for the three months ended September 30, 2025, were $51,002,000, down from $60,791,000 in the same period of 2024, a reduction of approximately 16.3%[24] - The company reported net realized and unrealized losses of $21,700,000 for the three months ended September 30, 2025, compared to losses of $11,494,000 for the same period in 2024[24] Business Focus - The company focuses on providing direct lending solutions to U.S. upper middle market companies, aiming for current income and capital appreciation through senior secured loans[26]

Core Insights - New Mountain Finance Corporation reported a net investment income of $0.32 per share for Q3 2025, maintaining its dividend distribution at the same rate for Q4 2025 [1][4][20] Financial Performance - Net investment income for Q3 2025 was $33.9 million, down from $34.5 million in Q3 2024 [3][4] - Net adjusted investment income per weighted average share decreased to $0.32 from $0.34 year-over-year [3] - The annualized dividend yield increased to 13.2% from 11.9% in the previous year [3] Portfolio and Asset Quality - The investment portfolio's fair value as of September 30, 2025, was $2,957.1 million, a decrease from $3,014.2 million as of June 30, 2025 [3][4] - The net asset value (NAV) per share was $12.06, down from $12.21 [3][4] - Approximately 95% of the portfolio is rated green, indicating strong credit performance [4][5] Investment Strategy and Activity - The company originated $127.3 million in investments during the quarter, offset by $177.1 million in repayments [5] - The company has increased its senior-oriented asset mix to 80% from 75% year-over-year [4] - A new stock repurchase plan has been established, allowing for the repurchase of up to $100 million worth of common shares [4] Debt and Liquidity - As of September 30, 2025, total statutory debt outstanding was $1,588.9 million, with a statutory debt-to-equity ratio of 1.26x [10] - The company had cash and cash equivalents of $63.7 million and $1,018.0 million of available capacity on its credit facilities [10] Industry Focus - New Mountain Finance Corporation primarily targets middle-market businesses that exhibit defensive growth characteristics, such as acyclicality and strong free cash flow [6][21] - The company emphasizes investments in high-quality growth leaders within well-researched industries [22]

Core Points - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] - It highlights that users with ad-blockers may face restrictions when trying to access content [1] Summary by Categories Technical Requirements - Users are advised to enable Javascript and cookies in their browsers to ensure proper functionality [1] - The presence of ad-blockers can lead to blocked access, necessitating their temporary disablement [1]

Core Points - New Mountain Finance Corporation will release its financial results for the quarter ended September 30, 2025, on November 3, 2025, after market close [1] - The Company will host an earnings conference call and webcast on November 4, 2025, at 10:00 am Eastern Time to review third quarter performance and discuss recent events [1]