GBDC: Over 7% Dividend Yield Supported by Rising Rates & Quality Portfolio

Summary

  • I have been making purchases of ‘higher quality’ BDCs this year, including GBDC due to consistent dividend coverage, NAV per share growth, and special dividends, delivering higher returns to shareholders.
  • GBDC has better-than-average positioning for rising interest rates with a potential for a 10% increase in annual NII for each 100 basis point increase in the underlying rate.
  • I believe that GBDC will continue to pay special dividends to avoid excise tax and will raise capital through accretive equity offerings as needed.
  • Credit quality remains strong with low non-accruals at 0.8% of the portfolio and include the recently added PPT Management and Uinta Brewing. SUNS also has a position in PPT Management that was discussed on the recent call and will likely be added back to accrual.
  • NAV per share hit a new high, increasing by 0.2% (from $16.11 to $16.15) and has increased 23 out of the last 24 quarters, after excluding the impact from previous special dividends.

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