High-Yield Peril: Oxford Square Capital’s 25% Dividend Comes at a Steep Price

For investors seeking substantial income, Oxford Square Capital presents a seemingly irresistible proposition: a dividend yield exceeding 25%. However, this extraordinary payout is shadowed by a dramatic erosion of shareholder capital, with the stock’s value plunging more than 40% since the start of the year. The company maintains a policy of monthly distributions even as its underlying worth contracts significantly.

Recent quarterly results paint a concerning picture of the company’s financial health. The net asset value (NAV) per share fell to $2.06 in the second quarter. Concurrently, net investment income declined from $6.1 million to $5.5 million. The most alarming metric reveals a payout ratio surpassing 106% of cash flow. This indicates that the dividend is not being sustained by actual investment earnings but is instead... Read more...