Capital Southwest (CSWC) Stock in Focus on 10.97% Dividend Yield
Given the ongoing turmoil amid expectations of a recession in the near term, solid dividend-yielding stocks are highly desirable. One such stock is Capital Southwest Corporation CSWC.
Capital Southwest is a Dallas, TX-based, internally managed business development company with $1.2 billion in investments at fair value as of Mar 31, 2023. The company is a middle-market lending firm, and focuses on supporting the acquisition and growth of middle-market businesses with $5-$35 million investments across the capital structure, including first lien, second lien and non-control equity co-investments.
On Apr 26, Capital Southwest announced a quarterly dividend of 59 cents per share, consisting of a regular dividend of 54 cents and a supplemental dividend of 5 cents.
Over the past five years, CWSC increased its dividend numerous times, with an annualized dividend growth rate of 9.9%. Considering last day’s closing price of $19.68, the company’s dividend yield currently stands at 10.97%. This is impressive compared with the industry average of 2.65%.
Capital Southwest Corporation Dividend Yield (TTM)
Capital Southwest Corporation dividend-yield-ttm | Capital Southwest Corporation Quote
In July 2021, CSWC’s board of directors approved a share repurchase program, authorizing the company to repurchase up to $20 million of its outstanding shares of common stock. As of Mar 31, 2023, it had $20 million available under the share repurchase program. Such strategic moves enhance shareholders’ value and boost investors’ confidence in the stock.
Investors, who are interested in this Zacks Rank #2 (Buy) stock, should first take a look at its fundamentals mentioned below before making any investment decision.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CSWC’s ability to sustain its attractive dividend yield depends on the earnings growth rate. Its earnings are projected to see growth rates of 12.7% and 1.3% in fiscal 2023 and fiscal 2024, respectively, depicting a robust earnings picture. Also, it has an impressive surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 3.88%.
It has been witnessing consistent organic growth. Capital Southwest’s total investment income witnessed a compounded annual growth rate (CAGR) of 24.4% over the last three fiscal years (2020-2023). The company’s top line is expected to keep improving in the near term. In 2024 and 2025, its top line is anticipated to witness growth of 39.2% and 11.7%, respectively.
The company’s ROE of 13.21% is higher than the industry average of 12.69%. This shows that it reinvests its cash more efficiently than its peers.
Hence, the CSWC stock is fundamentally solid. So far this year, shares of Capital Southwest have gained 15.1% compared with the industry’s rise of 3.5%.
Image Source: Zacks Investment Research
Therefore, income investors must watch this stock as it will help generate robust returns over time.
Other Finance Stocks With Solid Dividends
A couple of other finance stocks, like Ares Capital Corporation ARCC and Artisan Partners Asset Management Inc. APAM, are worth a look as these have robust dividend yields.
Considering the last day’s closing price, Ares Capital’s dividend yield currently stands at 10%. Over the past three months, shares of ARCC have gained 2.5%.
Based on the last day’s closing price, Artisan Partners’dividend yield currently stands at 5.12%. Over the past three months, shares of APAM have gained 25.3%.
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Ares Capital Corporation (ARCC) : Free Stock Analysis Report
Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
