Triangle Capital (TCAP) is a component in my ‘General’ BDC portfolio and has been near the average of my rankings for a while with an average risk profile and lower than average returns due to its pricing. TCAP has one key advantage over the other BDCs which is its internally managed cost structure that is one of the most efficient in the industry. TCAP has a strong balance sheet with plenty of liquidity to grow the portfolio and leverage this low cost structure to maximize returns to shareholders.
One of the key risks to future portfolio growth and increased dividends is the high amount prepayments due to increased competition driving down its portfolio yield. TCAP’s management has been prudent in its portfolio and dividend growth and is now well positioned for the coming quarters.
This article discusses the pros and cons of investing in TCAP along with earnings projections, dividend sustainability and growth potential over the coming quarters including best and worst case scenarios as well as key risk considerations, updated rankings/pricing compared to the other 25 BDCs that I follow.
- Interest rate sensitivity analysis
- Timing for future share issuances
- Projected total returns compared to the other BDCs
- Price target based on expected total returns
- Pricing based on multiples of NAV and projected earnings
- Overall rankings and recommendations