Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other investment vehicles such as Business Development Companies, REITs, and Closed End Funds to enhance income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on creating a balanced portfolio that not only provides income through dividends but also captures growth, aiming for a total return that aligns with the S&P 500 [1]. - The strategy suggests that a solid base of classic dividend growth stocks can be effectively supplemented with alternative assets to boost overall investment income [1].

Financial Performance - Net investment income per share was $0.48 ($0.49 excluding excise taxes)[6] - Net asset value per share was $16.70[6] - Annualized ROE on net investment income was 11.5% (11.8% excluding excise taxes)[6] - The company declared a 4Q'24 regular dividend per share of $0.40, resulting in an annualized dividend yield of approximately 9.6%[6] Portfolio Composition - The total fair value of the portfolio was approximately $2.0 billion, invested in 110 companies[6] - The weighted average yield at amortized cost of debt investments was 10.7%[6] - Approximately 98% of the portfolio consisted of first-lien loans[6] - Non-accrual investments represented 1.3% of the portfolio based on fair value[6] Balance Sheet and Liquidity - The outstanding debt balance was $858 million, with a quarter-end debt-to-equity ratio of 0.72x[6] - Total liquidity was $513 million, including $71 million in cash and $442 million in undrawn committed debt capacity[6]

Financial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 15 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering strategies to utilize various investment vehicles - seeking out high quality dividend stocks, and other assets that offer potential for long term-growth that pack a serious punch for bill-paying potential. I use myself as an example that with a solid base of classic dividend growth sto ...

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other investment vehicles such as Business Development Companies, REITs, and Closed End Funds to enhance income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The company advocates for a balanced approach to investing, focusing on both growth and income to maximize investment potential [1]. - The strategy aims to create a solid base of classic dividend growth stocks, which can lead to significant bill-paying potential over time [1]. Performance Comparison - The total return from this hybrid investment strategy is reported to be on par with the S&P index, indicating its effectiveness in generating returns [1].

Financial Data and Key Metrics Changes - Total investment income for Q4 2024 was $34.9 million, up 16.9% from $29.8 million in the prior year period [34] - Net investment income for Q4 2024 was $14.8 million or $0.45 per share, compared to $15.4 million or $0.58 per share for the same period last year [35] - NAV per share at the end of Q4 was $16.50, down from $16.61 at the end of Q3 2024 [36] Business Line Data and Key Metrics Changes - The total investment portfolio as of December 31, 2024, had a fair value of approximately $1.41 billion, reflecting a small increase of approximately 1.2% from $1.39 billion at the end of Q3 2024 [25] - New private credit loans comprised 17% of overall new investments, funded at a weighted average spread of 489 basis points over the reference rate [32] Market Data and Key Metrics Changes - The company reported an 11.6% yield as of December 31, 2024, which remains highly attractive by historical measures [23] - The weighted average total yield to maturity of debt and income-producing securities at fair value was 10.65% [30] Company Strategy and Development Direction - The company aims to maintain a competitive dividend yield while being disciplined in capital deployment for better opportunities in the future [40] - The investment philosophy focuses on delivering attractive risk-adjusted returns through a diversified portfolio that spans both liquid bank loans and private credit loans [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the evolving macroeconomic backdrop, emphasizing the importance of floating rate senior secured credit in the current environment [16][17] - The company is positioned to act quickly and efficiently when attractive opportunities arise, despite ongoing uncertainty around interest rates [12][20] Other Important Information - The Board and management team recalibrated the base dividend to $0.36 beginning in Q1 2025 to support NAV stability [28] - The company has a stock repurchase plan approved by the Board, allowing for the acquisition of up to $20 million of PSBD stock [39] Q&A Session Summary Question: Outlook for dividends and sustainability - Management indicated that the new dividend level was set conservatively based on various scenarios and the current deal environment [44][46] Question: Potential investment sales or prepayments outlook - Management noted elevated repayment and refinancing activity in Q4, with expectations for continued refinancing rather than new M&A activity in the near term [48][50] Question: Impact of cautious deal opportunities on leverage - Management confirmed that while they would not actively reduce leverage, they would be patient in waiting for more attractive investment opportunities [54] Question: Optimal mix between liquid investments and private credit loans - Management stated that they do not have a prescribed mix but will seek the best opportunities available at any given time [56] Question: Exposure to tariffs and potential impacts - Management assessed that tariff exposure in the portfolio is minimal, with a low single-digit percentage across the portfolio [65][66]

Core Insights - Palmer Square Capital BDC Inc. (PSBD) reported revenue of $34.87 million for the quarter ended December 2024, reflecting a 17% increase year-over-year [1] - The earnings per share (EPS) for the quarter was $0.46, down from $0.58 in the same quarter last year [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $34.89 million, resulting in a revenue surprise of -0.05% [1] - The company experienced an EPS surprise of -4.17%, with the consensus EPS estimate being $0.48 [1] Performance Metrics - Investment income from non-controlled, non-affiliated investments showed varied results: - Other income was reported at $0.28 million, below the average estimate of $0.40 million [4] - Dividend income was $0.66 million, compared to the average estimate of $0.70 million [4] - Interest income was reported at $33.25 million, slightly below the average estimate of $33.65 million [4] - Over the past month, shares of Palmer Square Capital BDC Inc. returned -1.9%, compared to a -2.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - For Q4 2024, the company generated net investment income of $0.47 per share, representing an annualized yield of over 11% based on the December 31 NAV [11] - The total investment income for the fourth quarter was $56 million, consistent with the prior quarter, primarily due to a higher average portfolio balance [18] - The net asset value as of December 31 was $16.80 per share, slightly down from $16.85 per share as of September 30 [11] Business Line Data and Key Metrics Changes - The direct lending platform achieved record deployment levels in both Q4 and the full year of 2024, growing the portfolio by approximately $100 million in the quarter [12] - 94% of 2024 originations were in first lien investments, with an average loan-to-value ratio under 40% [12] - The median EBITDA across the portfolio was $88 million, indicating strong underlying performance [15] Market Data and Key Metrics Changes - The company maintained a diversified portfolio with 189 investments in 135 companies across more than 25 industries, with average exposure in any single portfolio company being less than 1% of total assets [15] - Non-accruals remained stable at 0.6% of total investments at fair value, reflecting overall stability in credit quality [21] Company Strategy and Development Direction - The company proposed a strategic affiliate merger with Carlyle Secured Lending 3, expected to enhance scale, liquidity, and operational efficiencies [13][28] - The company aims to increase origination activity while prioritizing credit performance and maintaining a diversified portfolio [15] - The company has received investment grade ratings from Fitch and Moody's, allowing for the issuance of its first institutional bond deal [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to leverage the broader Carlyle network for maximum recoveries for underperforming borrowers [22] - The company anticipates an accelerating deal environment in 2025, with a focus on sourcing transactions with significant equity cushions and conservative leverage profiles [26][29] - Management highlighted strong market demand for private credit and a growing pipeline of new originations [28][29] Other Important Information - The total dividend declared for Q4 2024 was $0.45 per share, consisting of a base dividend of $0.40 and a supplemental dividend of $0.05 [19] - The company reported a total aggregate realized and unrealized net loss of about $4 million for the quarter, primarily due to a markdown on an investment in Aimbridge [21] Q&A Session Summary Question: Inquiry about the joint venture and future plans - Management indicated that the consolidation of MMCF 2 onto the balance sheet would free up non-qualifying asset capacity, with plans to ramp up the first JV and potentially return capital from that vehicle in the near term [34][36] Question: Clarification on tax line drop in Q4 - Management confirmed that the drop was a year-end true-up based on the audit, with expectations for future quarters to be in line with prior periods [38] Question: Discussion on growth plans for the BDC - Management stated that the current focus is on capital deployment and completing the merger process, with future growth initiatives to be considered afterward [40] Question: Inquiry about fee income in Q4 - Management noted that fee income and OID acceleration were lower than historical averages, with an incremental dividend from the JV impacting the income line [45] Question: Clarification on the incremental dividend related to the joint venture - Management confirmed that the incremental dividend was about $1.2 million, impacting net investment income by approximately two cents per share for the quarter [51]

Financial Performance - Net Investment Income (NII) per share was $0.50[7] - Net Asset Value (NAV) per share increased to $21.51, a rise of $0.33 from the previous quarter[7] - The company declared monthly dividends of $0.165 per share, resulting in an annualized dividend yield on NAV of 9.21%[7] - The portfolio's weighted average yield decreased to 13.1% from 14% due to lower SOFR rates[7, 20] - Net investment income for the quarter increased by $0.3 million, or 2.5%, to $11.2 million[20] Portfolio Composition and Activity - Total investments at fair value amounted to $799.5 million, spread across 51 companies[7] - 73% of the portfolio is in first-lien loans, and 89% is in secured loans[7] - The average investment per obligor is $16.0 million, representing 2% of the investment portfolio at fair value[7] - New investments during the quarter totaled $151.6 million, while exits and prepayments reached $165.2 million, resulting in net originations of ($13.7) million[20] - Four obligors are on non-accrual, representing $28.5 million or 4.0% of debt investments at fair value[7, 20] Leverage and Liquidity - Outstanding debt balance was $316 million, with a quarter-end debt-to-equity ratio of 0.68x[7] - Current investment capacity stands at $207 million under undrawn committed bank lines[7]

Investor Presentation for the Fiscal Quarter Ended June 30, 2024 FINANCING FOR LOWER MIDDLE MARKET COMPANIES Gladstone Capital Overview Background: Legal Disclaimer Forward-Looking Statements: This presentation may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include comments with respect to our objectives and strategies, and the result ...

Portfolio Overview - Gladstone Capital's portfolio reached $750 million in fair value, diversified across 51 companies and 12 industries as of December 31, 2023[11, 43] - The investment portfolio is conservatively structured, with 90% in secured loans and 73% in lower-risk 1st lien loans[11, 34] - The weighted average leverage across the core proprietary loan portfolio is approximately 40x EBITDA[11, 34, 44] - The portfolio generates an attractive weighted average yield of 139% and supports an annual cash distribution of $099 per share[11] Financial Performance - New investments totaled $58 million during the quarter, including $47 million in add-on investments to existing portfolio companies[31] - Net originations for the quarter were strong at $36 million[31, 35] - Net investment income (NII) for the quarter increased 86% to $119 million, or $0274 per share, covering the current recurring common stock distribution by over 110%[34] - Total assets increased to $7666 million, with $750 million in investments at fair value as of December 31, 2023[58] Strategy and Market Dynamics - Gladstone Capital targets companies with $3-25 million in EBITDA and investments of $8-40 million[10, 24] - Approximately 78% of the portfolio is backed by private equity sponsors as of December 31, 2023[24] - Over 90% of private debt funds raised exceed $1 billion and are managed by firms focused on larger borrowers (>$25 million EBITDA)[30]