Company Focus – Capital Southwest (CSWC)

Company Focus – Capital Southwest (CSWC)

Specs

Capital Southwest Corp Share Price – $24.88 Financials / Asset Management & Custody Banks
$576 millionP/E 9.62Dividend Yield – 7.62%Dividend Streak – 5 yrs
Current as of January 20, 2022

Company Profile

Capital Southwest Corporation (CSWC) is an internally managed investment company, which is engaged in providing customized financing to middle market companies in a range of investment segments located primarily in the United States. The Company’s subsidiary, Capital Southwest Management Corporation (CSMC) generally incurred all normal operating and administrative expenses, including, but not limited to, salaries and related benefits, rent, equipment and other administrative costs required for its day-to-day operations. The Company’s investment objective is to produce risk-adjusted returns by generating current income from its debt investments and capital appreciation from its equity and equity related investments. The Company invests primarily in senior debt securities, secured by security interests in portfolio company assets. It also invests in equity interests in its portfolio companies alongside its debt securities.

5 yr Chart

My Shares

Shares purchasedCost per shareEstimated Annual Income
227$25.12$426.00

I chose this investment along with my purchase of KKR Real Estate to partially replace Teekay LNG Partners after their merger because the yield virtually matched Teekay’s and has a similar dividend safety profile. While there is a risk of a dividend cut over the next economic cycle the risk to me is mitigated by placing this in my High Yield Portfolio which comprises only 16% of my combined holdings. This investment also served to balance the High Yield Portfolio’s diversification by reducing percentage in the Energy sector from 63% to 59%.

Simply Safe Dividend Rating 50

Capital Southwest – Middle market lending and support – CSWC Capital Southwest

Sources: Walls Street Journal, TD Ameritrade, Simply Safe Dividends