Monthly Dividend Stock In Focus: Main Street Capital

Up to date on April 1st, 2025 by Nathan Parsh

Enterprise Growth Corporations – or BDCs, for brief – could be a nice supply of present yield for earnings buyers.

Important Avenue Capital Company (MAIN) is a superb instance of this. MAIN inventory has a present dividend yield of 5.2%, however the yield grows to 7.3% when factoring within the firm’s particular dividends.

Higher but, Important Avenue Capital inventory pays month-to-month dividends.

You’ll be able to obtain our full Excel spreadsheet of all 76 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink beneath:

The inventory’s excessive dividend yield and month-to-month funds make it a stable alternative for earnings buyers.

Important Avenue Capital’s enterprise seems to be on stable footing. This text will focus on the funding prospects of Important Avenue Capital Company intimately.

Enterprise Overview

Important Avenue Capital Company is a Enterprise Growth Firm (BDC). Our full record is right here.

The corporate operates as a debt and fairness investor for decrease center market firms (these with $10-$150 million of annual revenues) in search of to remodel their capital buildings.

BDCs can spend money on each debt and fairness, which provides them a bonus over firms that spend money on personal debt or personal fairness alone.

Important Avenue Capital Company additionally invests within the personal debt of middle-market firms (not decrease middle-market firms) and has a budding asset administration advisory enterprise.

Supply: Investor Presentation

Each transaction kind and geography extremely diversify holdings. By transaction kind, the BDC acquires most of its offers by way of recapitalization and leveraged buyouts.

Important Avenue Capital Company additionally has a really excessive diploma of business diversification.

On the finish of This fall 2024, Important Avenue had pursuits in 84 lower-middle-market firms (valued at $2.5 billion), 15 middle-market firms ($155 million), and 91 personal mortgage investments ($1.9 billion).

Progress Prospects

Important Avenue Capital Company’s development prospects come from its distinctive technique of driving funding returns. In flip, the BDC sustains its excessive month-to-month dividend payout, and grows it over time.

On November 4th, 2024, Important Avenue Capital introduced a 2.0% dividend improve to $0.25 per share paid month-to-month. The present annualized dividend payout is $3.00 per share.

On February twenty seventh, 2025, Important Avenue Capital reported fourth-quarter and full-year outcomes. The quarter’s web funding earnings elevated to 0.2% to $90.4 million, in comparison with $90.1 million in This fall 2023. Internet funding earnings per share of $1.02 declined 5% year-over-year.

Distributable web funding earnings per share totaled $1.08, which was down 4% from $1.12 in This fall 2023. Important Avenue’s web asset worth ended the quarter at $29.20, an 8.4% improve from the top of the earlier 12 months.

Important Avenue has established a stable document prior to now decade, with a nine-year and five-year web funding earnings per share CAGR of seven.2% and 10.3%, respectively.

We count on MAIN to develop its web funding earnings per share by 1% per 12 months over the following 5 years.

Dividend Evaluation

MAIN pays a month-to-month dividend. The corporate has additionally paid substantial supplemental dividends on varied events. The newest instance was a supplemental payout of $0.30 per share that was declared on February twenty fifth, 2025.

These are one-time particular dividends, however we count on the corporate to proceed this custom of particular dividends when distributable NII per share considerably exceeds its month-to-month dividend payouts.

The supplemental dividends have been a results of producing realized positive aspects from Important Avenue’s fairness investments.

Supply: Investor Presentation

The dividend seems safe. For instance, based mostly on NII-per-share the corporate simply coated its dividend yearly since 2021.

We count on MAIN to generate NII per share of $4.00 in 2025. With a ahead annualized dividend payout of $3.00 per share, MAIN has an anticipated dividend payout ratio of roughly 75% for this 12 months.

Its common dividend development and occasional particular dividends suggest that its dividend is in fine condition.

To keep away from company earnings tax as a BDC, Important Avenue should distribute not less than 90% of its taxable earnings, leaving little wiggle room to fund development.

Whereas this technique has labored extraordinarily effectively because the final recession, we do warning that this technique of funding turns into considerably much less enticing (and dearer) in weaker financial intervals.

The primary menace to the dividend is a recession, which might drive many debtors to default and trigger rates of interest on floating-rate loans to plummet.

In consequence, earnings per share would doubtless decline quickly, forcing the corporate to right-size its dividend. For now, nonetheless, the dividend seems to be protected.

Remaining Ideas

Though Important Avenue Capital Company is off the radar for many dividend development buyers, this BDC has a robust historical past of delivering substantial shareholder returns.

The agency’s sturdy observe document of superior funding administration and experience within the decrease center market phase provides it a robust aggressive benefit within the personal fairness and debt business.

Additional, Important Avenue Capital Company is a shareholder-friendly BDC with a excessive yield and month-to-month payouts.

Additional Studying: 20 Highest-Yielding BDCs

Don’t miss the sources beneath for extra month-to-month dividend inventory investing analysis.

And see the sources beneath for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.