Key Highlights

  • Prospect Capital (NASDAQ:PSEC) showed an indicated Yield of 29.17% at USD 1.44 on the high-dividend screen on November 6, 2026, down 7.10%, with a Market Value of about USD 768.7 million.
  • On November 4, 2026 the company declared monthly dividends of USD 0.035 per share for November, December and January, unchanged from the prior rate and equal to USD 0.42 a year.
  • Net Investment income for the quarter ended September 30 was USD 76.4 million, or USD 0.15 per share, which covers the USD 0.105 quarterly Dividend by about 143%.
  • Net asset value fell to USD 5.36 per share from USD 5.71 at June 30 and USD 6.45 a year earlier, and the company approved a USD 200 million share buyback.

Why the Yield Is High

The 29.17% figure for Prospect Capital (NASDAQ:PSEC) annualises the USD 0.035 monthly dividend, or USD 0.42 a year, against a price of USD 1.44. The trailing yield on the screen is higher at 34.03%, which shows that payments over the past year were larger than the current rate. Unlike several names on the screen, this payout is covered by current income. Net investment income of USD 0.15 per share for the September quarter compares with USD 0.105 of dividends over three months, coverage of about 143%, simple arithmetic. The yield is high mainly because the share price trades far below net asset value. At USD 1.44, the stock trades at roughly 27% of the USD 5.36 net asset value per share, a discount that signals doubt about asset values rather than about the near-term dividend.

What Drove the Latest Move

The company reported results for its fiscal first quarter of 2027 on November 4 after the close and held a call on November 5. Net investment income was USD 76.4 million, or USD 0.15 per share, down from USD 0.17 a year earlier. Net asset value per share fell 6.1% in the quarter to USD 5.36, extending a decline from USD 6.45 a year ago. Non-accrual loans improved to 1.8% of the portfolio at cost from 4.7% at June 30, and to 0.2% at fair value. The board authorised a USD 200 million common share buyback, and the company agreed to sell its roughly 8.3% stake in RGIS for about USD 22.0 million. It also priced USD 300 million of 8.95% notes due 2031 on October 29 while redeeming notes due in November 2026. The 7.10% fall on November 6 followed the drop in net asset value.

Sustainability and Risks

Coverage looks adequate on the latest quarter, but the falling asset base is the main risk. If net asset value keeps declining, income-producing Assets shrink, and net investment income can fall with them. Refinancing at 8.95% raises funding costs relative to older Debt and can squeeze the spread the company earns. A buyback at a deep discount to net asset value can add value per share, but only if executed at scale. Investors should watch the next quarterly net asset value, net investment income per share, non-accruals, buyback activity and any change to the monthly rate after January.

Where Things Stand

Prospect Capital screens at a 29.17% yield on a USD 0.035 monthly dividend that current net investment income covers by about 143%. The pressure is on asset values, as net asset value fell to USD 5.36 from USD 5.71 in one quarter and the stock trades near 27% of that figure. A USD 200 million buyback and lower non-accruals are positives. The next net asset value report will show whether the decline is slowing, and buyback execution will show whether management can narrow the gap between price and book value.