Oxford Square Capital: Dividend Sustainability Under Scrutiny Amid Market Pressure

The investment landscape for Oxford Square Capital appears increasingly challenging, with recent technical indicators and financial metrics raising significant concerns about the stability of its shareholder distributions. Following the release of its Q3 2025 results, the company faces persistent headwinds, primarily a declining net asset value and a deeply concerning payout ratio that casts doubt on its dividend policy.

Operational results for the third quarter of 2025 presented a mixed picture. While earnings per share of $0.07 USD met consensus estimates and revenue of $10.24 million USD slightly exceeded expectations of $9.60 million USD, underlying weaknesses are evident. The net asset value (NAV) per share declined from $2.06 USD to $1.95 USD. Furthermore, the net margin remained negative at -6.39%, despite a positive return on equity of 14.80%.

The focal point for investors is the sustainability of the monthly dividend, currently set at $0.035 USD per share, which implies a gross yield of approximately 22.8%. The critical issue is an extreme negative payout ratio of -1,050%, a clear indicator that current earnings are insufficient to fund the distributions. This, combined with the erosion of NAV, places the dividend’s future in serious question. Key upcoming dates for shareholders include an ex-dividend date of December 17, 2025, with payment expected on December 31, 2025. A subsequent ex-dividend date has been announced for March 17, 2026.

Technical and Sentiment Analysis Points to Weakness

Chart analysis and market sentiment data depict a bearish environment for the stock. A preponderance of sell signals is evident across short- and long-term moving averages. As of December 10, 2025, 22 technical indicators were signaling a bearish trend, compared to only four bullish signals. Elevated short interest, recently recorded at 25.89%, adds to the downside risk, potentially amplifying negative price movements on adverse news.

Should investors sell immediately? Or is it worth buying Oxford Square Capital?

• Current share price: €1.58; Year-to-date performance: -35.16%; Distance from 52-week high: -42.05%.
• The equity is trading below its 50-, 100-, and 200-day moving averages. A Relative Strength Index (RSI) reading of 31.7 suggests the stock is nearing technically oversold territory.

Institutional Context and Forward-Looking Scenarios

Institutional investors hold a stake of approximately 6.44% in the company. In a potentially supportive move, the board has authorized a share repurchase program of up to $25 million USD. The company's market valuation and key metrics reflect its structural challenges: a market capitalization of around $150 million USD, a negative price-to-earnings (P/E) ratio of -46, and a beta of 0.49, indicating lower volatility relative to the market, which may not fully reflect the underlying business risk.

Looking ahead, two divergent paths emerge. Should the net asset value stabilize and yields on the company's credit and CLO investments improve, both the dividend and share price could find support. Conversely, a continued decline in NAV or persistently deficit operational results would keep dividend viability in doubt, especially against the backdrop of the severely negative payout ratio.

In the near term, market participants will closely monitor the upcoming dividend events and any market impact from the activated buyback program. These factors will be pivotal in determining whether the current negative technical and fundamental pressures can be alleviated.