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Main Street (MAIN) Rewards Investors With 2.5% Dividend Hike

Zacks Equity Research

Main Street Capital Corporation MAIN has increased its monthly common stock dividend for third-quarter 2019 by 2.5% from the previous payout to 20.5 cents. Prior to this hike, the company had raised dividend by 2.6% in February 2019.

The new dividend will be paid on Jul 15, Aug 15 and Sep 16 to shareholders on record as of Jun 28, Jul 18 and Aug 20, respectively.

We remain optimistic about its potential to continue enhancing shareholder value, driven by strong cash-generation capabilities.

Over the last three-five years, this Zacks Rank #2 (Buy) company witnessed earnings per share growth of 4.5%. Also, it is expected to deliver strong earnings performance as indicated by its projected earnings growth of 2.8% for 2020.

Moreover, organic growth has remained strong for Main Street, which can be seen from its revenue story. Revenues witnessed a CAGR of 13.5% over the last five years (2014-2018). The company’s projected sales growth rate of 6.9% for 2019 and 8.2% for 2020 indicates constant upward momentum.

Main Street’s debt/equity ratio is 0.23 compared with the industry average of 0.47, reflecting lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.

Also, the company’strailing 12-month return on equity (ROE) reflects its superiority in terms of utilizing shareholders’ fund. The company’s ROE of 10.76% compares favorably with 9.21% for the industry.

Our Viewpoint

Main Street’s growth prospects look encouraging based on its strong capital position and robust fundamentals. Further, the projected increase in earnings is encouraging. Also, the company has been able to gain analysts’ confidence, as indicated by a slight upward revision in the Zacks Consensus Estimate for current-year earnings over the past 60 days.

The stock has gained 6.9% over the past three months, outperforming 4.5% growth of the industry it belongs to.

Stocks to Consider

The Zacks Consensus Estimate for Solar Capital Ltd. SLRC has increased 1.7% for the current year in the past 30 days. The company’s share price has rallied 1.6% in the past six months. It carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ares Capital Corporation ARCC has witnessed 4.1% upward earnings estimate revision for 2019 in the past 30 days. Its share price has risen 1% in the past six months. It carries a Zacks Rank of 2.

Newtek Business Services Corp. NEWT currently sports a Zacks Rank #1. Its shares have gained 10.4% in past six months and its earnings estimates for 2019 have moved up 4.7% in the past 30 days.

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Solar Capital Ltd. (SLRC) : Free Stock Analysis Report
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Main Street Capital Corporation (MAIN) : Free Stock Analysis Report
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Zacks Investment Research