Revealed on Might fifth, 2026 by Bob Ciura
On the floor, month-to-month dividend shares are extremely interesting for revenue buyers.
That’s as a result of these explicit dividend shares pay their dividends each month, as an alternative of as soon as per quarter like most dividend-paying shares.
Month-to-month dividend shares present shareholders with 12 dividend funds per yr, which may very well be enticing for buyers searching for extra frequent payouts.
You’ll be able to obtain our full Excel spreadsheet of 119 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink under:
Capital Southwest Corp. (CSWC) is a month-to-month dividend inventory with a really excessive yield.
In fact, buyers ought to look additional into an organization’s monetary situation and future outlook.
This text will analyze CSWC in larger element.
Enterprise Overview
Capital Southwest Company is an internally-managed funding Enterprise Growth Firm, or BDC.
The corporate makes a speciality of offering personalized debt and fairness financing to decrease center market (LMM) firms and debt capital to upper-middle market (UMM) firms positioned primarily in america.
On February 2nd, 2026, Capital Southwest reported its fiscal Q3-2026 outcomes for the interval ending December thirty first, 2025. CSWC’s fiscal yr ends on March thirty first.
In the newest quarter, Capital Southwest’s complete funding revenue rose to $61.4 million from $56.9 million, pushed by portfolio progress and secure money yields, partially offset by decrease charge revenue.
PIK curiosity remained effectively managed, supporting earnings sturdiness. The weighted common debt yield edged right down to 11.3% from 11.5% as a result of portfolio combine and repayments.
Pre-tax web funding revenue was $34.6 million, or $0.60 per share, versus $34.0 million, or $0.61, reflecting larger common shares excellent.
Undistributed taxable revenue declined to $1.02 per share after supplemental dividends, whereas common dividends remained totally lined and cumulative dividend protection continues to exceed 100%.
CSWC’s credit score portfolio expanded to 132 lower- and upper-middle-market firms, up from 126 within the prior quarter.
The roughly $2.0 billion funding portfolio stays closely weighted towards 1st lien secured debt, which
represents the overwhelming majority of credit score holdings.
Portfolio diversification stays sturdy throughout greater than 20 industries, with Healthcare Providers, Media & Advertising and marketing, and Meals/Agriculture & Beverage persevering with to rank among the many largest sector exposures.
For FY2026, we anticipate NII/share of $2.35.
Progress Prospects
Capital Southwest’s annual web funding revenue per share has risen from $0.61 per share in 2017, to an estimate of $2.35 for 2026.
In flip, shareholders have obtained a excessive yield, as is typical for BDCs. CSWC’s extended historical past as a BDC firm, and skilled administration group, have allowed it to maintain a double-digit funding yield more often than not.
The corporate has refinanced its personal loans at decrease charges over time, leading to larger web funding revenue.
Moreover, with solely 30 staff, working bills as a proportion of complete property have additionally been declining. They had been 4.9% in FY2016, however are at present lower than half this quantity at 1.7%.
The upper dividends seen over the previous few years are as a result of particular dividends that the corporate can afford from further positive aspects (e.g., fairness gross sales), which aren’t recorded as funding revenue.
Because of this, each the supplemental and particular dividends are technically lined. We anticipate each NII/share and the bottom per-share dividend to develop by round 1% per yr over the following 5 years.
Dividend & Valuation Evaluation
On July twenty third, 2025, Capital Southwest declared a base month-to-month dividend of $0.1934 (switching from quarterly funds). The bottom annualized dividend stays at $2.32 per share.
For 2026, we estimate a dividend payout ratio of 99% when it comes to NII-per-share. Usually, this might be a purple flag.
However Capital Southwest’s dividend needs to be thought of safer than its 99% payout ratio implies, contemplating the supplemental payouts, the particular payouts, and the most recent quarterly dividend enhance.
The payout ratio doesn’t embody the realized positive aspects which can be within the type of non-investment revenue, ensuing within the abnormally excessive determine.
CSWC is at present buying and selling at a 2026 price-to-NII ratio of 10.3, which is barely above our honest worth estimate of 10.
A declining valuation a number of may scale back annual returns by 0.5% per yr. Offsetting this might be estimated NII-per-share progress of 1% per yr, in addition to the 9.6% dividend yield.
Total, complete returns are estimated at 8.7% per yr over the following 5 years.
Ultimate Ideas
Capital Southwest is a diversified enterprise improvement firm and one of many oldest available in the market, having navigated by quite a few financial cycles.
Its financials have been rising quick following the 2015 spinoff, and its optimum financing prices have resulted in a prudent portfolio enlargement.
We forecast annualized returns of 8.7% per yr, excluding any supplementary dividends, powered primarily by the inventory’s hefty dividend yield, and modest enterprise progress.
We price the inventory as a maintain because of the elevated dividend threat.
Further Sources
Don’t miss the assets under for extra month-to-month dividend inventory investing analysis.
And see the assets under for extra compelling funding concepts for dividend progress shares and/or high-yield funding securities.
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