This investment company is expected to grow earnings at a rate of 16.7% this year. The shares have a current dividend yield of 5.65%, paid monthly.
Gladstone Investment Corporation (GAIN)
From Adrian Day’s Global Analysts
Gladstone Investment made several significant investments in the last quarter, including two where it supported management buyouts. First, it acquired, together with senior management, Utah Pacific, a leading provider of steel components used in bridge replacement and construction in the western United States.
And it also supported the buyout of a luxury apartment rental company. In both, it provided equity and senior debt to complete the management buyouts. These were two of several investments and exits in recent months.
The day prior to the Utah transaction, it raised $117 million in seven-year notes, yielding 4.875%, bolstering its balance sheet, perhaps for the transaction.
In its latest earnings report, earlier this month, it reported Net Investment Income of 24 cents per share, up from 20 cents for the prior quarter. Net Asset Value increased over a dollar to $12.66/share, largely from higher valuations for its equity holdings, which account for about 25% of NAV.
Although the regular monthly dividend stays at 7 cents, where it has been since the beginning of 2020, the company paid a special distribution (from net capital gains) of 6 cents in June and announced another 3 cents for next month. The yield, and the 1.14 times NAV, mean that Gladstone is trading towards the upper end of its historical valuations. But in today’s environment, a fully covered yield that high is attractive.
Adrian Day, Adrian Day’s Global Analyst, adriandayglobalanalyst.com, 410-224-8885, August 24, 2021