My take is diffferect from yours. I view the yield on PSEC as 11.8% based on net investment income of about $1.20 per share. This is my primary interest: maintain and hopefully increase this NII. My return comes primarily from this $1.20 per share distribution. Fluctuations in marrket price are of much less concern. The return on capital of about $.40 is net a plus because if it is cut the price will fall and I can buy more shares at a higher yield. If I don't like the $.40 I can return it by buying more shares.
Given the over distribution, using a NII yield to compare with other BDC's is a better approach. On that you and I are doing the same thing.
Return of capital is not a huge issue. But it is an issue, it is an inefficiency in capital usage that is a minor irritant to me. What I mean by that is the company has been selling shares to raise capital and then distributing it. IF there were no cost to the raise then it would make no difference. But there is a cost to the raises. Call it 8%. So the company is selling shares for $0.92 on the $1.00 to raise capital and then giving it out dollar for dollar. That is not efficient use of the capital raise strategy. This reminds me of Buffet complaining about the Kraft sale being done in a tax inefficient way when it could have been structured to be tax efficient. I dislike inefficiency.