Prospect Capital Corporation logo

Company type: Externally managed business development company
Employees: 0. The company is externally managed by Prospect Capital Management L.P.

PSEC Dividend, NAV and Risk Analysis

Prospect Capital offers broad exposure to private credit, structured credit, real estate, and operating businesses, but that diversification comes with unusually complex valuation and capital-structure questions. The investor case depends less on headline income than on whether cash earnings can stabilize while common-share NAV stops eroding.

What the company does

PSEC lends to and invests in privately held middle-market companies. Its portfolio includes first-lien and subordinated loans, collateralized loan obligation interests, real estate-related investments, and equity positions. It funds those assets with unsecured debt, non-recourse financing, perpetual preferred stock, and common equity.

Current company synopsis

At March 31, 2026, Prospect reported total assets of USD 6.38 billion and common-share NAV of USD 2.95 billion, or USD 6.05 per share. NAV declined from USD 6.21 at December 31 and USD 7.25 a year earlier. The one-year fall is the central capital-preservation issue for common shareholders.

The balance sheet included USD 1.61 billion of perpetual preferred stock. That capital can support asset growth and liquidity, but preferred claims sit ahead of the common stock and make the economic leverage borne by common shareholders more significant than debt ratios alone suggest.

PSEC Dividend Coverage History and Fly High Projection

*Fly High Investing uses a proprietary projection algorithm that more accurately predicts dividend coverage vs common analyst sentiment. The 12 month projection is based on the most recent data and quarter

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RSS Annual & Quarterly Reports

Latest reported quarter: earnings and NAV

For the fiscal quarter ended March 31, 2026, PSEC generated net investment income of USD 78.5 million, or USD 0.16 per common share. That was down from USD 0.19 per share in both the December quarter and the prior-year March quarter. Net income applicable to common shareholders was USD 26.4 million, or USD 0.05 per share.

NAV fell to USD 6.05 per common share from USD 6.21 at December 31. Over the nine months ended March 31, the company recorded USD 230.3 million of net realized losses, partly offset by USD 129.8 million of net unrealized gains. That combination is important: favorable marks did not fully compensate for losses already crystallized.

Interest represented 93.4% of quarterly investment income, up from 84.7% in the December quarter. A higher interest share makes the income mix easier to interpret, but the lower NII per share shows that portfolio yield, asset mix, financing costs, or share-count effects still pressured common earnings.

Capital structure and liquidity

Prospect reported USD 1.75 billion of cash plus undrawn revolving-credit commitments. Net-of-cash debt was 27.0% of total assets, and the net-of-cash asset-coverage ratio was 366%. All debt was unsecured or non-recourse, which reduces direct collateral pressure at the parent level.

Those figures should be read with USD 1.61 billion of perpetual preferred stock. The company reported net-of-cash debt to total equity of 37.6% when preferred stock was counted as equity. For common shareholders, preferred distributions and liquidation priority remain fixed claims ahead of their residual value.

What investors should watch

  • Common NAV: The decline from USD 7.25 to USD 6.05 over twelve months signals that capital preservation remains unresolved.
  • Recurring NII: Track whether per-share earnings stabilize after falling to USD 0.16.
  • Realized losses: Compare new realized losses with unrealized recoveries and cash proceeds from exited investments.
  • Portfolio complexity: CLO residuals, real estate, and controlled-company equity require judgment-heavy valuations and can behave differently from senior loans.
  • Preferred stock: Monitor preferred issuance, funding cost, redemption terms, and the claim it places ahead of common equity.
  • Liquidity quality: Distinguish unrestricted cash from undrawn commitments and review any borrowing-base or covenant constraints.

Investor view

Verified facts: Quarterly NII was USD 0.16 per common share, NAV was USD 6.05, cash plus undrawn revolvers totaled USD 1.75 billion, and the capital structure included USD 1.61 billion of perpetual preferred stock.

Analysis: Prospect has considerable liquidity and diversified sources of income, but the common-share case is not simply a yield story. Falling NAV, realized losses, complex assets, and a large preferred layer can transfer risk toward common shareholders. A stronger investment case requires sustained NII, fewer realized credit losses, and evidence that NAV erosion has ended.

Public research and subscriber analysis

This page uses public business information, dividend-coverage history, current news, SEC filings, and principal risks. It does not identify whether PSEC is a current Fly High portfolio holding.

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