The Increase and Other Dividends

Some of the people who are watching out for some of my sheep.

Just a couple of days ago I wrote about adding to our position of CSWC. I also shared a quote from the President and CEO of CSWC.  He said, “While future dividend declarations are at the discretion of our board of directors, it is our intent to continue to distribute quarterly supplemental dividends for the foreseeable future while base rates remain materially above long-term historical averages and we have a meaningful UTI (undistributed taxable income) balance.” – President and CEO Bowen Diehl.

Yesterday I saw that what he said were intentions were realized for the September dividend. This post won’t repeat all of what I said, but I think a few comments are in order.

Dividend and Investment Income Email Update from Seeking Alpha

Is Your Investment Flock Productive?

I am not a fan of laziness or idleness. The scriptures, and especially in Proverbs, it is clear that lazy people or “sluggards” have a dark future. According to Etymonline, sluggard is a word from “late 14c. (late 13c. as a surname), slogard, “habitually lazy person, one afflicted with the sin of sloth,” with -ard + Middle English sluggi “sluggish, indolent” (early 13c.), which is probably from Scandinavian; compare dialectal Norwegian slugga “be sluggish,” sluggje “heavy, slow person,” dialectal Swedish slogga “to be slow or sluggish.” In any language sluggard is not a compliment. In German you would be a Faulenzer or “idler.” “Faulenze” means laziness.

But this doesn’t mean that your flock won’t have lambs while you sleep. So you invest in your flock, and your sheep herd, if it has quality ewes, will reward you if you are patient. We currently have 3,500 shares of CSWC. Those shares are currently worth just a bit more than $75,000.

Dividend Announcement Up 2 Cents

The news from CSWC is good. Not only did the quarterly dividend increase by two cents, but there is another special dividend of five cents. If you want to receive that dividend, then buy your shares before the Ex-Dividend date.

Seeking Alpha Images

By now you know what I look at, but I added some numbers on the following image to focus your attention on the ratings, the EPS, the PE, the dividend yield, and the market capitalization of CSWC.

CSWC Summary and Ratings Summary from Seeking Alpha

Here is the dividend picture. This snapshot was taken before the September dividend was added. It usually takes a couple of days for Seeking Alpha to update their tables with the new information.

The payout ratio makes sense for a BDC. Normally 89% would be too high for many investments.

Capital Southwest Graph

This graph (from the CSWC website) is helpful because it reveals the three types of dividends CSWC has paid since 2016. There are the quarterly dividends shown in blue, the supplemental dividends shown in dark green, and a set of four special dividends in bright green. In total, this makes for a pretty investment picture.

There are three types of dividends. Website is http://www.capitalsouthwest.com

Table Format

If you like tables more than graphs, then here is another way to look at the dividends from 2020 to the present.

Source: CSWC Investor website (from a csv file)

Recommendation

As always, just because Wayne buys something doesn’t mean you should. However, if you have $250K or more in retirement assets, then adding some CSWC can help round out your portfolio. As I said a couple of days ago, if you have bonds in your portfolio that are paying 5%, you might want to sell some of them and replace them with CSWC shares that are paying 10%.

Full Disclosure

Cindie and I own substantial amounts of several different BDCs. In addition to CSWC we own shares of MAIN, ARCC, and OBDC, to name a few. I think BDCs are good long-term positions for dividends in retirement. This is a part of my Easy Income Strategy.