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The central doctrine
A dividend can be declared for many reasons. Over time, it must be earned. Discover why Fly High treats earning power as the primary signal behind sustainable income, and why yield or price alone can never answer the dividend question.
Explore the Earnings Fixes Everything doctrineFly High Academy Planned
Guided courses will combine short video lessons, worked examples, transcripts, and interactive Flight Checks. The course paths below are previews of the planned curriculum. They are not yet available as completed courses.
Understand yield, coverage, payment frequency, and the difference between income and total return.
▸ Short videos · Examples · Calculator practice
Connect company earnings, cash generation, leverage, and asset quality to the durability of distributions.
▸ Screen lessons · Case studies · Source notes
Combine income sleeves, change market assumptions, and compare dividend funding with an inflation-adjusted 4% withdrawal rule.
▸ Guided video · Scenario lab · Downloadable notes
Investing dictionary
Search plain-English definitions written for income investors. Filter by topic or first letter, including dividends, BDCs and REITs.
277 definitions
Accrual status is the accounting status determining whether a lender continues recognizing interest income on a loan.
Accrued interest is interest earned since the most recent coupon payment but not yet paid.
Acquisition spread is the difference between an acquired property's expected yield and the buyer's associated cost of capital or financing.
Adjusted basis is tax basis after required increases or decreases, including specified purchases, distributions, fees, and other adjustments.
Adjusted earnings are a company’s earnings figure after specified items are added to or removed from a standard accounting result. For U.S. companies, an adjusted earnings measure is often a non-GAAP measure…
AFFO
Adjusted funds from operations (AFFO) is a supplemental performance measure used in REIT analysis. It adjusts funds from operations for selected costs and accounting items to help explain recurring operating performance. There…
Affiliate investment is an investment involving an affiliated person or entity under the applicable legal, accounting, or fund-reporting rules.
Agency MBS
Agency mortgage-backed security is a mortgage-backed security issued or guaranteed by a U.S. government agency or government-sponsored enterprise, with the exact guarantee depending on the issuer.
Amend and extend is a loan modification that changes contractual terms and extends the maturity date, sometimes with fees, pricing changes, or additional protections.
Amortization is systematic allocation of an intangible asset, premium, discount, or other amount over a stated period.
Amortized cost is an asset or liability amount adjusted over time for principal payments, premium or discount amortization, and applicable credit-loss provisions.
An annualized dividend converts a current periodic dividend rate into a one-year amount, usually by multiplying the latest regular payment by the number of expected payment periods in a year.
Annualized included dividends is the regular dividend plus supplemental dividends paid regularly, expressed as a one-year per-share amount. Irregular special dividends are excluded.
Asset allocation is the distribution of a portfolio among asset classes, strategies, or exposure groups.
Asset coverage ratio is a statutory or contractual measure comparing assets with borrowings and other senior securities. The required threshold depends on the applicable structure and rules.
ABS
Asset-backed securitization is a financing process in which loans or other receivables are pooled and used to support securities sold to investors. The payments made by the underlying borrowers help fund payments…
Asset-liability repricing is the timing and amount by which asset yields and liability costs reset when benchmark rates change.
ATM offering
At-the-market offering is a program allowing an issuer to sell newly issued shares into the market from time to time under stated conditions.
Baby bond is an exchange-traded debt security commonly issued in smaller denominations than traditional institutional corporate bonds.
Tax withholding required from certain payments when taxpayer-identification or certification requirements are not satisfied.
Balance sheet is a financial statement reporting assets, liabilities, and equity at a specified date.
Base management fee is a recurring fee paid to an external adviser, usually calculated from a defined asset base under the investment advisory agreement.
Base-rate floor is a contractual minimum reference rate used when calculating interest on a floating-rate loan.
Basic EPS is earnings per share calculated using the weighted-average basic common shares outstanding.
BDC leverage is the use of borrowing or other financing that increases investment exposure relative to shareholder capital. It can increase the income earned on equity when investments perform well, but it…
Benchmark is a stated index, rate, or comparison standard used to evaluate performance or pricing.
Beta is a statistical estimate of how an investment's returns have moved relative to a selected market benchmark.
Book value is an accounting amount equal to assets minus liabilities. Book value per common share divides the amount attributable to common shareholders by common shares outstanding.
BDC
A business development company (BDC) is a type of closed-end investment fund that provides debt or equity capital to businesses, including small and medium-sized private companies. A publicly traded BDC gives stock-market…
Call protection is a period or provision limiting an issuer's ability to redeem a security early.
Call risk is the risk that an issuer redeems a callable security earlier than the investor expected.
A callable bond gives the issuer the right, under the bond’s terms, to redeem the bond before its stated maturity date.
Capital gain is a gain recognized when a capital asset is sold or otherwise disposed of for more than its adjusted basis.
Capital loss is a loss recognized when a capital asset is sold or otherwise disposed of for less than its adjusted basis, subject to tax limitations.
Capital stack is the ordering of a company's financing claims, commonly including secured debt, unsecured debt, preferred equity, and common equity.
Capital-gain distribution is a distribution of realized net capital gains, commonly reported by regulated investment companies and certain funds.
Capital-gains incentive fee is a performance fee based on qualifying realized capital gains after the adjustments specified in the advisory agreement.
Cap rate
Capitalization rate is property net operating income divided by property value or purchase price, using a stated trailing or forward NOI convention.
Cash dividend is a dividend paid in cash rather than additional shares or other property.
Cash interest income is interest a lender earns and receives in cash during the stated period. Distinguish it from accrued interest and payment-in-kind interest.
Cash rent is rent actually billed or collected in cash for a period, distinguished from noncash accounting adjustments.
Cash versus noncash investment income is a distinction between current cash receipts and recognized income without matching current cash, including some PIK interest and discount accretion. The mix matters when assessing how…
Catch-up provision is an incentive-fee provision allocating additional income to an adviser after the hurdle is met until the contractual sharing formula catches up.
CEF
A closed-end fund is an investment company that generally issues a fixed number of shares and invests the capital it raises in a portfolio of securities or other assets.
CMBS
Commercial mortgage-backed security is a security backed by a pool of commercial real-estate mortgage loans.
The company-specific earnings measure is the earnings measure the company itself identifies as the source of its dividend. The appropriate measure can differ by company type.
Comparable earnings measure is an earnings definition applied consistently across every period in a comparison or calculation.
Concentration risk is the risk that a large exposure to one issuer, sector, borrower, tenant, geography, or factor magnifies losses.
CPR
Conditional prepayment rate is an annualized estimate of the rate at which mortgage principal is expected to prepay.
Consensus estimate is an estimate derived from the forecasts of multiple independent analysts, usually summarized as an average or median for a specified measure and period.
CDR
Constant default rate is an annualized measure used to describe the rate at which loans in a pool default.
Constructive return of capital is a nontechnical description for return-of-capital tax treatment associated with economically supported cash generation or realization. Tax character alone does not prove construction.
Contractual rent is rent required by the written lease terms before any separate accounting normalization.
Control investment is an investment in an issuer over which the investor is treated as having control under the applicable legal or reporting definition.
Preferred stock that can be converted into common shares under specified terms.
Convexity is a measure of how a bond's interest-rate sensitivity changes as yields change.
Correlation is a statistical measure of how two return series move in relation to each other.
Cost basis is the amount used to determine gain or loss for tax purposes, adjusted under applicable tax rules.
Counterparty risk is the risk that the other party to a contract fails to perform its obligations.
Coupon rate is the annual interest rate stated on a bond, generally applied to its par value.
Covenant is a contractual promise or restriction in a loan, bond, or other financing agreement.
Covenant-lite loan is a loan with fewer or less restrictive maintenance covenants than traditional leveraged loans.
Coverage shortfall is the amount by which included dividends exceed the relevant earnings estimate for the same period and on the same per-share basis.
Coverage surplus is the amount by which the relevant earnings estimate exceeds included dividends for the same period and on the same per-share basis.
Credit conditions describe how available and costly borrowing is, including lender standards, interest-rate spreads, covenants, collateral requirements, maturities and market liquidity.
Credit rating is an opinion from a rating organization about the relative credit risk of an issuer or obligation, not a guarantee of repayment.
Credit risk is the possibility that a borrower or bond issuer will fail to make promised interest or principal payments, or that concern about repayment will reduce an investment’s value.
Credit spread is the yield or interest-rate difference between a credit instrument and a reference rate or lower-risk benchmark.
CRT security
Credit-risk transfer security is a security transferring specified mortgage credit risk from an issuer or guarantor to investors.
Cumulative dividend is a preferred dividend provision under which unpaid scheduled dividends accumulate according to the security's terms.
Cumulative preferred stock is preferred stock whose unpaid dividends accumulate according to its terms.
Currency risk is the risk that exchange-rate changes alter the value or income of an investment measured in the investor's home currency.
Current yield is a bond's annual coupon payments divided by its current market price.
Debenture is a debt obligation backed by the issuer's general credit rather than a specific collateral pledge, unless its terms state otherwise.
Debt-to-EBITDA is debt divided by earnings before interest, taxes, depreciation, and amortization, using the issuer's stated definitions.
Debt-to-equity ratio is debt divided by shareholders' equity, using the stated balance-sheet definitions.
Declaration date is the date on which a company formally announces or authorizes a dividend.
A declared dividend is a distribution that a company has formally announced. The declaration usually states the amount per share and the dates used to determine who receives it and when it…
Default is a failure to meet a contractual obligation, such as paying interest or principal when due, subject to any applicable cure provisions.
Default rate is the proportion of borrowers or obligations defaulting during a specified period under a stated definition.
DDTL
Delayed-draw term loan is a term loan that allows the borrower to draw committed amounts later, subject to its conditions and draw period.
Depositary share is a security representing a fractional interest in a larger preferred share or similar deposited security.
Depreciation is systematic allocation of a tangible asset's depreciable amount over its useful life.
Destructive return of capital is a nontechnical description for distributions that erode an investment base without being offset by sustainable economic returns. Tax character alone does not prove destruction.
Development yield is expected stabilized property income divided by development cost under the company's stated assumptions.
Diluted EPS is earnings per share calculated after reflecting potentially dilutive securities under the applicable accounting rules.
Direct lending is lending in which an investment manager or lender originates or negotiates a loan directly with a borrower rather than buying only public bonds.
Discount bond is a bond trading below its par value.
Discount narrowing is a change in which a fund's market-price discount to net asset value becomes smaller.
Discount to NAV is the percentage by which a fund's market price is below its net asset value per share.
Discount widening is a change in which a fund's market price moves farther below its net asset value.
Disposition is the sale or transfer of a property or other investment.
Distributable earnings is a company-defined measure intended to describe earnings available to support distributions. Its adjustments vary by company, so use the stated reconciliation and do not assume it equals NII, GAAP…
Distribution coverage is a comparison between a fund's distribution and the income, gains, or other measure stated as funding it.
Distribution rate is a distribution rate expresses a fund’s annualized distributions as a percentage of a stated value, commonly market price or net asset value.
Diversification spreads investment exposure across different sources of risk. It reduces reliance on one holding or one outcome, but it cannot eliminate investment losses. A portfolio with many names may still be…
Unpaid cumulative preferred dividends that must generally be addressed under the security's terms before common dividends can resume.
Dividend capture is a short holding strategy intended to receive a dividend, while remaining exposed to price changes, taxes, trading costs, and qualification rules.
DCR
Dividend Coverage Ratio compares a defined four-quarter earnings estimate with annualized included dividends. Earnings are the numerator; dividends are the denominator.
DCR/RE
Dividend Coverage Ratio / Retained Earnings (DCR/RE) is the sum of annualized earnings and recorded retained earnings per share, divided by annualized included dividends per share. It shows the effect of a…
Dividend cut is a reduction in the regular dividend per share compared with the preceding comparable payment.
Dividend declaration is a formal corporate action approving a dividend amount and its relevant dates, subject to the governing documents and applicable law.
How often a dividend is normally paid, such as monthly, quarterly, semiannually, or annually.
Dividend growth is an increase in the dividend paid per share over comparable periods. It differs from a higher dividend yield, which can result from a falling share price, and from receiving…
Dividend increase is a declared dividend per share that is higher than the comparable preceding regular payment.
DPS
Dividend per share is the dividend amount attributable to each eligible share over a stated period. It may describe a declared payment, historical payments or an indicated annual rate. Always identify which…
DRIP
A dividend reinvestment plan uses eligible dividend payments to purchase additional shares instead of leaving the distribution as cash. It is commonly called a DRIP. The provider's terms determine eligible securities, execution,…
Dividend resumption is the restart of dividend payments after a suspension or extended interruption.
Dividend support is the relationship between a company's earning power and the dividends it pays. Support is an analytical conclusion, not a guarantee of future payments.
Dividend suspension is a company's decision to stop declaring a dividend for an unspecified or stated period.
Dividend tax character is the final tax classification of a distribution, such as ordinary income, qualified dividend income, capital gain, or return of capital.
Dividend tax treatment is the way a distribution is classified and taxed under the rules that apply to the investor. In the United States, a payment may be reported as an ordinary…
Dividend yield is the annual dividend per share divided by the share price, expressed as a percentage. It puts the dividend income offered by a share in the context of its price.
Double-net lease is a net lease generally requiring the tenant to pay two major categories of property expense in addition to rent.
Drawdown is a decline from a prior portfolio or security value peak to a subsequent lower value.
Duration is a measure used to estimate how sensitive a bond or bond portfolio’s price is to a change in interest rates.
Duration gap is the difference between the interest-rate sensitivity of assets and liabilities under a stated measurement method.
Earning power is the recurring capacity of a business to produce the earnings relevant to its operations and shareholder distributions.
Earnings estimate revision is an analyst's increase or decrease to a previously published earnings estimate for a specified company and period.
EFE
Earnings Fixes Everything is Fly High Investing’s central doctrine: dividends must ultimately be supported by earnings, and earning power is the primary signal we use to judge that support. The phrase does…
EPS
Earnings per share (EPS) is net income available to common shareholders divided by the weighted-average number of common shares outstanding for a stated period. Basic and diluted EPS use different share counts.
Earnings yield is annual earnings per share divided by the current share price, expressed as a percentage. It shows the earnings amount relative to the price paid for one share.
Economic book value is a management-defined estimate of book value reflecting specified economic valuation adjustments.
Economic occupancy is occupancy measured using rent or revenue actually collected or contractually due rather than physical space alone.
Equity co-investment is an equity investment made alongside a lender's debt investment in the same portfolio company.
An equity REIT owns or operates income-producing real estate. Its business is tied to the economics of properties, such as rent, occupancy and operating costs. It differs from a mortgage REIT, whose…
The ex-dividend date is the trading date from which a share normally trades without entitlement to the specified upcoming dividend. For an ordinary cash dividend, buying on that date is generally too…
Exchange-traded debt is a debt security listed for trading on a securities exchange, often in retail-sized denominations.
Excluded special dividend is an irregular or unpredictable special dividend omitted from the denominator of a stated dividend coverage calculation.
Exempt-interest dividend is a fund distribution attributable to tax-exempt interest and reported under the applicable tax rules.
Extension risk is the risk that principal is returned later than expected, often increasing duration when rates rise.
External growth is growth produced through acquisitions, development, financing, or other investments outside the existing same-store portfolio.
Externally managed BDC is a BDC whose investment management is performed by a separate adviser under an advisory agreement.
Fair value is an estimate of the price at which an asset or liability would be exchanged in an orderly transaction under the applicable accounting framework.
Fair value hierarchy is the accounting framework classifying fair-value inputs according to their observability.
Fair-value measurement is estimating the price at which an asset could be sold in an orderly transaction between market participants at the measurement date. For private loans, the estimate often relies on…
Fee income is income from agreed borrower or investment fees, such as commitment, amendment, origination, and prepayment fees. Some fees are recurring; others depend on transactions or repayments.
Repayment to an adviser of previously waived or supported expenses when contractual conditions are satisfied.
Fee waiver is an adviser's agreement to forgo part of a fee, temporarily or permanently, according to stated terms.
Final dividend is a dividend associated with completed annual results and commonly subject to the issuer's approval process.
Final tax character is the distribution classification reported after the tax year, which can differ from estimates made when payments occurred.
Financial covenant is a covenant requiring the borrower to maintain or satisfy a stated financial measure or threshold.
First call date is the earliest date on which an issuer may redeem a callable security under its terms.
FIFO
First in, first out is a basis method treating the earliest acquired shares as sold first when specific identification is not used or available.
First-lien debt is debt secured by a first-priority claim on specified collateral, subject to the loan documents and applicable legal arrangements. Its priority concerns that collateral. It does not mean the lender…
First-lien senior secured loan is a senior secured loan with a first-priority lien on specified collateral, subject to intercreditor agreements, exceptions, and the actual loan documents. First lien does not eliminate loss…
FCCR
Fixed-charge coverage ratio is a measure comparing an earnings or cash-flow amount with interest and other specified fixed obligations.
Fixed-rate liability is a borrowing or obligation whose interest rate remains fixed for its specified term or fixed-rate period.
Fixed-rate loan is a loan with an interest rate fixed for a stated period. Its market value can still change as rates and credit conditions change.
Fixed-rate reset preferred stock is preferred stock whose fixed rate resets periodically using a benchmark plus a contractual spread.
Fixed-to-floating preferred stock is preferred stock paying a fixed dividend rate for an initial period and a floating rate based on a benchmark afterward.
Floating-rate asset is an asset whose interest rate resets periodically according to a benchmark or stated formula.
FRN
A floating-rate bond pays interest at a rate that resets periodically, usually by reference to a benchmark plus a stated spread.
Floating-rate loan is a loan whose stated interest rate resets against a benchmark or other contractual formula. Changes in benchmark rates may change income, subject to floors, caps, and borrower performance.
Foreign tax credit is a U.S. tax credit that may be available for qualifying foreign taxes, subject to applicable rules and limitations.
Foreign tax withholding is tax withheld by a foreign jurisdiction or payer from dividends, interest, or other investment income.
1099-B
Form 1099-b is a U.S. tax information form reporting proceeds and specified basis information from broker transactions.
1099-DIV
Form 1099-div is a U.S. tax information form reporting dividends and distributions, including their reported tax classifications.
1099-INT
Form 1099-int is a U.S. tax information form reporting specified interest income and related items.
Forward dividend yield is an indicated annual dividend rate divided by the current market price. It relies on an assumption about future payments.
Forward quarter is a future fiscal quarter represented by forecasts rather than reported financial results.
Four-quarter annualized earnings estimate is the sum of the two most recently reported quarters of actual company-specific earnings and the following two quarters of independent analyst consensus estimates.
FCF
Free cash flow is a nonstandard measure generally derived from operating cash flow after specified capital spending. Definitions vary by company and analyst.
FFO
Funds from operations (FFO) is a supplemental measure used to explain REIT operating performance alongside financial statements prepared under generally accepted accounting principles. Nareit's definition adjusts net income for specified real-estate-related items.…
GAAP
Generally accepted accounting principles are the accounting rules and standards used to prepare U.S. financial statements.
Goodwill is an accounting asset generally arising when an acquisition price exceeds the recognized fair value of identifiable net assets.
Gross expense ratio is a fund's annual operating expenses as a percentage of assets before contractual waivers or reimbursements.
Gross lease is a lease in which the landlord bears most property operating expenses while the tenant pays a stated rent, subject to the lease terms.
Ground lease is a long-term lease of land under which the tenant may own or construct improvements according to the agreement.
Haircut is the difference between collateral value and the amount a lender advances against it.
Hedge is a position intended to reduce exposure to a specified risk. A hedge can be incomplete and can introduce costs or other risks.
A high-yield bond is a bond rated below investment grade and generally viewed as carrying a higher risk of default than an investment-grade bond.
A holding period is the length of time an investor is treated as owning an investment. Tax rules specify when the period begins, ends, or carries over.
Hurdle rate is a minimum return or income threshold that must be met before a specified incentive fee begins to accrue.
Impairment is a reduction recognized when an asset's carrying amount is not expected to be fully recoverable under the applicable accounting rules.
Implied cap rate is a capitalization rate inferred from a REIT's market valuation and estimated property net operating income.
Included dividend is a regular dividend or regularly paid supplemental dividend counted in the denominator of a stated dividend coverage calculation.
Income diversification is spreading income sources across different issuers, structures, industries, and risk drivers.
Income incentive fee is a performance fee based on a defined measure of investment income, usually subject to a hurdle and other contractual provisions.
Income statement is a financial statement reporting revenue, expenses, gains, losses, and profit or loss over a period.
Indicated dividend rate is a current periodic dividend multiplied by the expected number of payments in a year, without implying that future declarations are guaranteed.
Inflation risk is the risk that rising prices reduce the purchasing power of investment income or principal.
Interest coverage ratio is a borrower's earnings or cash-flow measure divided by interest expense, using the definition stated by the analyst or company.
Interest expense is the cost recognized for borrowed money or other interest-bearing obligations during a stated period.
Interest income is income earned from loans, bonds, cash or other interest-bearing assets during a stated period. The amount recognized may differ from cash received.
Interest-rate floor is a contractual minimum interest rate or benchmark level below which the applicable rate will not fall.
Interest-rate risk is the possibility that changes in interest rates affect an investment's value, income or financing costs. The direction and size of the effect depend on the assets, liabilities and contracts…
Interest-rate swap is a derivative contract exchanging interest-payment streams according to stated fixed and floating terms.
Interim dividend is a dividend declared before final full-year results, commonly used in markets where companies distinguish interim and final payments.
Internal growth is growth produced from existing assets through rent increases, occupancy, redevelopment, expense control, or similar operations.
Internal risk rating is a lender's internal classification of investment risk. Scales and definitions vary and must be read from the reporting company.
Internally managed BDC is a BDC that employs its own investment-management personnel rather than paying an external adviser under the usual external structure.
Interval fund is a registered closed-end fund that periodically offers to repurchase a limited percentage of its outstanding shares.
Investment company taxable income is the taxable-income measure relevant to a RIC's distribution requirements, calculated under tax rules rather than simply copied from GAAP net investment income. Check the issuer's tax disclosures…
Investment-grade bond is a bond rated within the investment-grade categories of a recognized credit-rating organization.
Issuer concentration is a large portfolio exposure to one issuer or related group.
Junior debt is debt that ranks behind specified senior obligations in priority of payment or recovery under the governing agreements.
K-1
Schedule K-1 is a U.S. tax form used to report a recipient’s share of income, deductions, credits, and other tax items from certain pass-through entities, estates, or trusts.
Lease expiration schedule is a table showing when leases expire and how much rent or space is associated with each expiration period.
Lease renewal rate is the proportion of expiring leases renewed during a stated period under the company's definition.
Leasing commission is a fee paid to secure, renew, or modify a lease.
Leasing spread is the percentage change between rent on a new or renewed lease and the comparable rent on the expiring lease.
Level 1 asset is an asset valued using quoted prices for identical items in active markets under the fair-value hierarchy.
Level 2 asset is an asset valued mainly with observable inputs other than a direct active-market quote for the identical item.
Level 3 asset is an asset valued using significant unobservable inputs under the fair-value hierarchy.
Leverage is the use of debt or other arrangements that increase economic exposure relative to the capital supplied by owners. It can amplify gains and losses. When discussing leverage, identify the level…
Leverage-adjusted expense ratio is a fund expense ratio presented after adjusting the denominator or expenses for leverage under the stated method.
Liquidating distribution is a distribution connected with a full or partial liquidation that may represent a return of invested capital rather than ordinary operating income.
Liquidation preference is the amount or priority a preferred security is entitled to receive before common equity in a liquidation, subject to senior claims and governing terms.
Liquidity describes how readily an asset can be converted to cash or how readily an organization can meet cash obligations. These are related but different uses of the term. An investment can…
Loan modification is a negotiated change to a loan's rate, maturity, covenants, collateral, payment schedule, or other terms.
LTV
Loan-to-value ratio is a loan amount divided by the value assigned to its collateral or financed asset.
Long-term capital gain is a capital gain treated as long term under the applicable holding-period rules.
Maintenance covenant is a financial covenant tested periodically while a loan remains outstanding, not only when the borrower takes a specified action.
Make-whole call is a redemption provision requiring a payment calculated from discounted remaining cash flows under the security's formula.
Managed distribution policy is a fund policy targeting regular distributions according to a stated formula or schedule, whether or not current income alone covers the payment.
Management fee is a fee paid from fund assets to an investment adviser for portfolio-management services.
Margin call is a demand for additional collateral or repayment when financing terms or collateral values require it.
Mark to market is the process of updating an asset or liability to a current market-based or estimated fair value.
Market price is the price at which a security trades in the market at a specified time. A quoted last price, closing price, bid, and ask may differ, so the time and…
Market risk is the risk of loss from broad changes in market prices, rates, spreads, volatility, or investor demand.
Master lease is a lease covering multiple properties, units, or facilities under one agreement.
Maturity date is the stated date on which an obligation's principal is due, subject to calls, defaults, extensions, or other contractual provisions.
mREIT
A mortgage REIT finances real estate by originating or purchasing mortgages and mortgage-backed securities. It generally earns interest on those investments. Its earnings depend on the assets, the financing used to hold…
MSR
A mortgage servicing right, or MSR, is the contractual right to service a mortgage loan and receive a fee for performing that work.
NAV dilution occurs when a fund or business development company issues new shares at a price below its current net asset value per share. The new shares contribute less value per share…
NAV
Net asset value (NAV) is the value of assets minus liabilities. Example, for a BDC, NAV per share expresses the net assets attributable to common shareholders on a per-share basis. It is…
Net increase in net assets from operations is a financial-statement result combining net investment income with realized and unrealized investment gains and losses for a period. It is not interchangeable with net…
NIS
Net interest spread is the difference between the yield earned on interest-producing assets and the cost of the financing used to hold them.
NII
Net investment income (NII) is investment income remaining after the expenses reported against it. In BDC analysis, it helps describe the earnings generated by the investment portfolio after financing and operating costs.…
NOI
Net operating income (NOI) measures property revenue after property operating expenses. It helps describe the operating performance of real estate before financing and certain other costs. NOI is not automatically the amount…
Accounting treatment under which a lender generally stops recognizing interest income on a troubled loan when collection is doubtful under its stated policy. Read the lender's policy because cash receipts and reversals…
A non-accrual loan is a loan on which the lender has stopped recognizing interest income under its accounting policy, generally because collecting the amounts owed is uncertain. The loan can remain an…
Non-agency MBS
A non-agency mortgage-backed security is backed by mortgage loans but is not issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae.
A nonrecurring item is a gain, charge or event that is not expected to repeat as part of ordinary operations. The label requires judgment and does not become valid merely because management…
Occupancy rate is the proportion of available property space or units that are occupied under the issuer's stated method.
An option is a contract that gives its holder a right related to an underlying asset at a stated price by a stated date, while the seller assumes the corresponding obligation if…
Option income commonly refers to premiums and realized results generated by selling or otherwise using options. The accounting and tax treatment depend on the strategy and transactions.
Ordinary dividend is for U.S. federal income tax reporting, an ordinary dividend is a corporate distribution reported as ordinary dividend income. Some ordinary dividends also meet the requirements to be qualified dividends.
Original issue discount accretion is the recognition over time of a loan's original issue discount as income under the applicable accounting method. It can increase reported income before equivalent cash is received.
The payment date is the date a declared dividend is scheduled to be paid to eligible shareholders. It tells an income investor when the distribution is due, not when to buy shares…
PIK
Payment-in-kind (PIK) income is interest or another return received in a non-cash form, often by adding the amount to a loan balance. It can contribute to recognized income without producing a matching…
The payout ratio is dividends divided by a stated earnings measure for the same period, usually expressed as a percentage. It shows how much of that measured earnings amount is represented by…
Prepayment risk is the chance that borrowers will repay mortgage principal earlier or later than an investor expected, changing the timing and return of the investment.
Profit margin is a profit margin expresses a defined measure of profit as a percentage of revenue. Gross, operating and net profit margins use different profit measures and are not interchangeable.
Property demand is the willingness and ability of tenants or buyers to occupy or acquire space in a particular market, property type and price range.
A qualified dividend is an ordinary dividend that meets U.S. federal tax requirements for the preferential tax rates that apply to net capital gain.
A quarterly dividend is a dividend paid on a schedule of four payment periods per year.
REIT
A real estate investment trust (REIT) is a company that owns, operates or finances income-producing real estate and meets the applicable qualification rules. REITs can give investors exposure to real estate through…
Realized versus unrealized gain or loss is a realized result follows a sale, settlement, or other realization event; an unrealized result reflects a change in estimated value while the investment is held.…
The record date is the date a company uses to identify shareholders on its records for a specified dividend or other corporate action. It is not the cash payment date and should…
Recurring earnings are earnings produced by a company’s ordinary operations that an analyst expects can continue under reasonably similar conditions. The term is not a single standardized GAAP measure.
RIC
A regulated investment company (RIC) is a U.S. federal tax classification available to qualifying investment companies. It is distinct from being a BDC. A BDC's investment-company structure and its chosen tax treatment…
Rent growth is the percentage change in rent over a stated period. REITs may report growth for new leases, renewals, same-store properties or the overall portfolio, so the basis matters.
Repo
A repurchase agreement, often called a repo, is short-term secured financing in which one party sells securities and agrees to buy them back later at a higher price.
RMBS
A residential mortgage-backed security, or RMBS, is a bond-like investment whose cash flows come from a pool of home mortgage loans.
ROC
Return of capital is for U.S. federal tax reporting, return of capital is a nondividend distribution that generally reduces an investor’s tax basis until basis reaches zero.
Revenue growth is the percentage increase or decrease in a company’s sales over a stated period, usually compared with the same period a year earlier.
Second-lien senior secured loan is a secured loan whose claim on shared collateral ranks behind a first-lien lender under the applicable documents. Its recovery can be lower when the borrower is distressed.
A Section 19(a) notice is a shareholder notice provided by a registered investment company when a distribution is paid from a source other than its net income. The notice commonly identifies estimated…
SOFR-based senior secured loan is a senior secured loan whose floating interest rate is calculated using a specified SOFR rate plus a contractual spread, subject to its reset dates, floor, and other…
A special dividend is an extra distribution made outside a company’s regular dividend pattern. It is often described as one-time or nonrecurring, so it should not be assumed to repeat.
Spillover income is taxable income a RIC retains for possible distribution in a later period, subject to applicable tax rules and issuer disclosure. It is not the same as unrestricted cash or…
Sponsor-backed company is a portfolio company owned or supported by a financial sponsor, commonly a private-equity firm. Sponsor support may affect financing and restructuring options but does not guarantee repayment.
A supplemental dividend is an additional dividend paid alongside a company's regular distribution. The label identifies a payment category, not a promise of recurrence. A company can pay supplements repeatedly, change their…
Tenant concentration is the proportion of rent, revenue, or space attributable to a tenant or group of tenants.
Total return combines the change in an investment's value with the income it produces over a stated period. For a dividend-paying share, it includes both price movement and dividends. Dividend yield alone…
A transferable rights offering gives existing shareholders subscription rights that can be used to buy newly issued shares, usually during a limited period. Unlike non-transferable rights, transferable rights may be sold or…
In a securities offering, underwriting is the process through which investment banks or other underwriters help an issuer structure, price, purchase, or distribute securities to investors.
UTI
Undistributed taxable income is taxable income recognized by a fund or company that has not yet been distributed to shareholders, subject to the entity’s tax rules and reported calculation.
Valuation is the process of estimating what an asset, security, or business is worth using market evidence, financial information, assumptions, and an appropriate method.
Volatility measures how much an investment’s returns or market price fluctuate. It describes variation, not the direction of future returns.
A warrant is a security that gives its holder the right to buy an issuer’s securities at specified terms before expiration.
WAM
Weighted average maturity is the average time until the debt investments in a portfolio mature, with larger positions receiving more weight.
XBRL
XBRL, or eXtensible Business Reporting Language, is a machine-readable format that tags financial and business data so computers can identify and compare reported facts.
YOC
Yield on cost is an annual dividend amount divided by the investor's stated acquisition cost, expressed as a percentage. It describes income relative to a historical cost basis. It is not the…
Zero-coupon bond is a zero-coupon bond does not make periodic coupon payments. It is generally issued or purchased at a discount and pays its face value at maturity, subject to issuer credit…
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