The Unusual BDC Thriving While Private Credit Fears Spread Across the Sector
SLR Investment, a business development company, has seen its shares rise 15% over the past year despite private credit fears in the sector, with a 10.4% trailing dividend yield. The company's dividend coverage is thin, with net investment income barely covering the quarterly distribution.
SLR Investment, a business development company, has seen its shares trade at almost $16, up 15% over the past year. The company lends to U.S. middle-market businesses through senior secured floating-rate loans and has a comprehensive portfolio worth $3.30 billion across 880 issuers in 110 industries. SLR Investment's net investment income (NII) was $1.59 per share for FY25, slightly short of the $1.64 distributions, a 3% shortfall. The company's credit quality is pristine, with a 100% performing book and a Q3 non-accrual rate of 0.3% at fair value. SLR Investment's net debt-to-equity is 1.14x, with over $850 million in available capital. The company's dividend is credible, but income investors should be aware of the thin coverage cushion. SLR Investment is set to report Q1 2026 results on May 5.
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