1 week Ago
Hiroshi Watanabe This will be my third article on Golub Capital BDC ( NASDAQ: GBDC ) since the publication of my initial bull thesis back in late 2023. After I issued the first article, I made a follow-up piece assessing Q1, 2024 performance, which clearly confirmed the identified strengths of GBDC and its cash generation power to accommodate stable dividends going forward. Just to quickly reminder you, these are the main drivers of bull thesis here: GBDC is the sixth largest BDC in terms of the value of NAV base, which provides a competitive edge relative to most of the other BDCs out there.
It helps keep the external leverage costs down, access more flexible financing and, perhaps most importantly, it allows GBDC to participate in larger ticket size transactions, which recently have started to gain traction the private credit space. The lion's share of portfolio is located in first lien segments, with almost 100% of the investments made on a floating rate structure. GBDC has very small non-accrual positions and healthy investment portfolio as implied by no meaningful positions categorized in the underperforming risk rating segment (according to internal risk rating scheme).
Attractive FWD dividend yield of close to 10% that is supported by strong adjusted NII generation, which, in turn, ensures a rather healthy dividend coverage level of ~ 130%. So far, the investment thesis has played out nicely, where GBDC has managed to benefit from sector-level tailwinds, while keeping .
