Two High-Yield Investments (Reaching 20.9%) That May Be Deceptive (Plus a Reliable 9% Payer)
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 08 2025
0mins
Should l Buy PSEC?
Source: NASDAQ.COM
Bankruptcy Impact on BDCs: The bankruptcy of auto-parts supplier First Brands has raised concerns about business development companies (BDCs), which provide loans to small and mid-sized firms, leading to fears of more issues in the private-credit market.
Caution Against High-Yield BDCs: Investors are advised to be cautious of BDCs like Blue Owl Capital and Prospect Capital Corp, which have high fees and poor long-term performance, making them less attractive despite their high yields.
Alternative Investment Recommendation: The Liberty All-Star Growth Fund (ASG) is highlighted as a better investment option, offering a 9% dividend and a significant discount to NAV, outperforming BDCs in total return.
Upcoming Investment Opportunities: The author plans to release a "mini-portfolio for 2026" featuring four high-yield closed-end funds (CEFs) with an average yield of 9.2% and potential for over 20% price upside, encouraging readers to access this information.
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Analyst Views on PSEC
About PSEC
Prospect Capital Corporation is a business development company that focuses on lending to and investing in private businesses. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. It invests primarily in senior and subordinated secured debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. It invests primarily in first and second lien secured loans and unsecured debt, which in some cases includes an equity component. It invests in debt and equity positions of structured credit, which are a form of securitization in which the cash flows of a portfolio of loans are pooled and passed on to different classes of owners in various tranches. It may also acquire controlling interests in companies in conjunction with making secured debt investments in such companies. Its investment adviser is Prospect Capital Management L.P.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Prospect Capital Corporation Reports Q3 2026 Earnings Insights
- Decline in Net Investment Income: Prospect Capital reported a net investment income of $78 million or $0.16 per share for the March 2026 quarter, down from $91 million or $0.19 in the previous quarter, indicating a weakening in profitability that may affect investor confidence.
- Slight Decrease in NAV: As of March 31, 2026, the company's net asset value per share was $6.05, down from $6.21 at December 31, 2025, reflecting a minor adjustment in asset value that could impact future financing capabilities.
- Dividend Adjustment: The company announced a monthly distribution of $0.035 per share for May through August 2026, a reduction from $0.045 per share in the previous quarter, indicating a more cautious approach to cash flow management that may affect shareholder return expectations.
- Portfolio Restructuring: The company is shifting its asset focus towards first lien senior secured middle market loans, with the first lien mix increasing by 790 basis points to 72% since June 2024, aiming to enhance risk management and improve long-term revenue potential.
See More
Prospect Capital Declares Monthly Dividend of $0.035
- Monthly Dividend Announcement: Prospect Capital has declared a monthly dividend of $0.035 per share, with a forward yield of 17.21%, indicating the company's ongoing ability to generate stable cash flow, which enhances investor confidence.
- Dividend Payment Schedule: The dividend is set to be paid on June 18, with a record date of May 27 and an ex-dividend date also on May 27, ensuring shareholders receive timely returns and further solidifying the relationship between the company and its investors.
- Earnings Performance Analysis: While Q3 net investment income exceeded expectations, disappointing interest income reveals challenges in the company's revenue diversification, which could impact future dividend capabilities.
- Market Reaction Expectations: Investor reactions to this dividend announcement may influence stock price movements, particularly in the current market environment, where a stable dividend policy could attract more income-seeking investors.
See More
Prospect Capital Q3 Earnings Miss Estimates, Stock Drops
- Earnings Performance: Prospect Capital reported a net investment income of $0.16 per share for fiscal Q3 2026, exceeding the analyst estimate of $0.11, yet declining from $0.19 in the previous quarter and the same quarter last year, indicating a weakening in profitability.
- Declining Interest Income: The total interest income for the quarter was $140.1 million, down from $149.0 million in the prior quarter and $159.3 million a year ago, and it missed the market expectation of $142.6 million, reflecting challenges in revenue generation for the company.
- Risk Management in Portfolio: As of March 31, 2026, only 2.5% of Prospect Capital's portfolio was invested in software companies, significantly lower than the 23% average across other BDCs, demonstrating the company's relative safety against AI-related risks and aiming to bolster investor confidence.
- Net Asset Value Changes: The net asset value per common share was $6.05 as of March 31, 2026, down from $6.21 at December 31, 2025, indicating pressure on asset management that could impact future investment decisions.
See More
Prospect Capital Reports Quarterly Net Investment Income Per Share of $0.16
Company Overview: Prospect Capital is a publicly traded investment firm that focuses on providing debt and equity financing to middle-market companies.
Recent Financial Performance: The company reported a quarterly dividend of $0.16 per share, reflecting its ongoing commitment to returning value to shareholders.
Investment Strategy: Prospect Capital primarily invests in a diversified portfolio of private companies, aiming to generate attractive risk-adjusted returns.
Market Position: The firm is positioned to capitalize on opportunities in the middle-market sector, which is often underserved by traditional financing sources.
See More
Prospect Capital Corporation Announces Earnings Report Filing
- Earnings Report Schedule: Prospect Capital Corporation expects to file its earnings report for the quarter ended March 31, 2026, after market close on May 7, 2026, demonstrating the company's commitment to transparency and timely information disclosure to enhance investor confidence.
- Conference Call Announcement: The company will host a conference call on May 8, 2026, at 9:00 a.m. Eastern Time, with a dial-in number of 888-338-7333, providing an accessible communication channel for investors to obtain the latest financial information.
- Live Webcast Availability: The conference call will also be available via a live listen-only webcast on the company's website, ensuring that investors can access real-time information, reflecting the company's efforts in digital communication.
- Company Background Overview: Prospect Capital Corporation is a business development company focused on lending to and investing in middle-market privately-held companies, aiming to generate both current income and long-term capital appreciation, highlighting its strategic positioning in the market.
See More
Prospect Enhanced Yield Fund Declares Monthly Cash Distributions
- Cash Distribution Announcement: Prospect Enhanced Yield Fund has declared cash distributions for April, May, and June 2026, each at $0.19 per share, reflecting the fund's ongoing cash flow stability and enhancing investor confidence.
- Annualized Distribution Rate: Based on the net asset value of $24.44 as of April 19, 2026, the annualized total cash distribution is $2.28 per share, yielding an attractive 9.33%, indicating the fund's appeal and competitiveness in the current market environment.
- Distribution Payment Schedule: Monthly cash distributions will be payable on the last business day of each month, ensuring shareholders receive regular income, which helps attract long-term investors and enhances market recognition.
- Portfolio Strategy: The fund focuses on investing in non-mortgage structured credit instruments, managing assets of $7.2 billion, showcasing its expertise in high-yield debt and equity investments, further solidifying its market position.
See More
Prospect Capital Corporation Reports Q3 2026 Earnings Insights
- Decline in Net Investment Income: Prospect Capital reported a net investment income of $78 million or $0.16 per share for the March 2026 quarter, down from $91 million or $0.19 in the previous quarter, indicating a weakening in profitability that may affect investor confidence.
- Slight Decrease in NAV: As of March 31, 2026, the company's net asset value per share was $6.05, down from $6.21 at December 31, 2025, reflecting a minor adjustment in asset value that could impact future financing capabilities.
- Dividend Adjustment: The company announced a monthly distribution of $0.035 per share for May through August 2026, a reduction from $0.045 per share in the previous quarter, indicating a more cautious approach to cash flow management that may affect shareholder return expectations.
- Portfolio Restructuring: The company is shifting its asset focus towards first lien senior secured middle market loans, with the first lien mix increasing by 790 basis points to 72% since June 2024, aiming to enhance risk management and improve long-term revenue potential.
See More
Prospect Capital Declares Monthly Dividend of $0.035
- Monthly Dividend Announcement: Prospect Capital has declared a monthly dividend of $0.035 per share, with a forward yield of 17.21%, indicating the company's ongoing ability to generate stable cash flow, which enhances investor confidence.
- Dividend Payment Schedule: The dividend is set to be paid on June 18, with a record date of May 27 and an ex-dividend date also on May 27, ensuring shareholders receive timely returns and further solidifying the relationship between the company and its investors.
- Earnings Performance Analysis: While Q3 net investment income exceeded expectations, disappointing interest income reveals challenges in the company's revenue diversification, which could impact future dividend capabilities.
- Market Reaction Expectations: Investor reactions to this dividend announcement may influence stock price movements, particularly in the current market environment, where a stable dividend policy could attract more income-seeking investors.
See More
Prospect Capital Q3 Earnings Miss Estimates, Stock Drops
- Earnings Performance: Prospect Capital reported a net investment income of $0.16 per share for fiscal Q3 2026, exceeding the analyst estimate of $0.11, yet declining from $0.19 in the previous quarter and the same quarter last year, indicating a weakening in profitability.
- Declining Interest Income: The total interest income for the quarter was $140.1 million, down from $149.0 million in the prior quarter and $159.3 million a year ago, and it missed the market expectation of $142.6 million, reflecting challenges in revenue generation for the company.
- Risk Management in Portfolio: As of March 31, 2026, only 2.5% of Prospect Capital's portfolio was invested in software companies, significantly lower than the 23% average across other BDCs, demonstrating the company's relative safety against AI-related risks and aiming to bolster investor confidence.
- Net Asset Value Changes: The net asset value per common share was $6.05 as of March 31, 2026, down from $6.21 at December 31, 2025, indicating pressure on asset management that could impact future investment decisions.
See More
Prospect Capital Reports Quarterly Net Investment Income Per Share of $0.16
Company Overview: Prospect Capital is a publicly traded investment firm that focuses on providing debt and equity financing to middle-market companies.
Recent Financial Performance: The company reported a quarterly dividend of $0.16 per share, reflecting its ongoing commitment to returning value to shareholders.
Investment Strategy: Prospect Capital primarily invests in a diversified portfolio of private companies, aiming to generate attractive risk-adjusted returns.
Market Position: The firm is positioned to capitalize on opportunities in the middle-market sector, which is often underserved by traditional financing sources.
See More
Prospect Capital Corporation Announces Earnings Report Filing
- Earnings Report Schedule: Prospect Capital Corporation expects to file its earnings report for the quarter ended March 31, 2026, after market close on May 7, 2026, demonstrating the company's commitment to transparency and timely information disclosure to enhance investor confidence.
- Conference Call Announcement: The company will host a conference call on May 8, 2026, at 9:00 a.m. Eastern Time, with a dial-in number of 888-338-7333, providing an accessible communication channel for investors to obtain the latest financial information.
- Live Webcast Availability: The conference call will also be available via a live listen-only webcast on the company's website, ensuring that investors can access real-time information, reflecting the company's efforts in digital communication.
- Company Background Overview: Prospect Capital Corporation is a business development company focused on lending to and investing in middle-market privately-held companies, aiming to generate both current income and long-term capital appreciation, highlighting its strategic positioning in the market.
See More
Prospect Enhanced Yield Fund Declares Monthly Cash Distributions
- Cash Distribution Announcement: Prospect Enhanced Yield Fund has declared cash distributions for April, May, and June 2026, each at $0.19 per share, reflecting the fund's ongoing cash flow stability and enhancing investor confidence.
- Annualized Distribution Rate: Based on the net asset value of $24.44 as of April 19, 2026, the annualized total cash distribution is $2.28 per share, yielding an attractive 9.33%, indicating the fund's appeal and competitiveness in the current market environment.
- Distribution Payment Schedule: Monthly cash distributions will be payable on the last business day of each month, ensuring shareholders receive regular income, which helps attract long-term investors and enhances market recognition.
- Portfolio Strategy: The fund focuses on investing in non-mortgage structured credit instruments, managing assets of $7.2 billion, showcasing its expertise in high-yield debt and equity investments, further solidifying its market position.
See More
