Blue Owl Capital Corp. (NYSE: OBDC) is the enterprise improvement firm (BDC) subsidiary of Blue Owl Capital Inc. (NYSE: OWL).
The BDC has $12.9 billion in property underneath administration and at present yields 9.8%.
In terms of the dividend, is administration as smart because the fowl within the firm’s title? Let’s discover out.
BDCs lend cash to companies that may’t get financing from a financial institution. Simply as banks do, Security Web seems at web curiosity earnings as an indicator of money circulate.
The bulk (69%) of Blue Owl Capital Corp.’s portfolio is made up of first lien senior secured loans. “First lien” means the corporate is on the entrance of the road to receives a commission, and “senior secured” means the loans are backed by collateral.
Moreover, 98% of its loans are floating price, which implies the charges on the loans fluctuate over time as different charges change throughout the nation.
That explains why rising rates of interest are sometimes good for lenders, particularly when the financial system is strong. They assist lenders generate extra income and web curiosity earnings.
Living proof, Blue Owl Capital Corp.’s web curiosity earnings is anticipated to soar 68% from $895 million to $1.5 billion this yr. Actually, it has been rising for a number of years.
The corporate’s most up-to-date quarterly dividend was $0.33 per share. That makes its annual yield a formidable 9.8%.
This yr, Blue Owl Capital Corp. is anticipated to pay out $575 million in dividends, which equates to a payout ratio of simply 38%. That’s down from final yr’s determine, a nonetheless very comfy 55%.
With that in thoughts, you possibly can’t make any assumptions in regards to the dividend.
However when you think about Blue Owl Capital Corp.’s low payout ratio and booming web curiosity earnings, you possibly can. Its dividend is secure.
Dividend Security Ranking: A
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