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FDUSZ - Fidus Investment Can't Afford Its 10.6% Dividend Yield But It Probably Doesn't Matter
Fidus Investment Corporation 6% Notes due 2024
Fidus Investment Has a Dividend Payment Deficit
Whenever you look at a high yield investment company or security, you need to ask if the company can afford the dividend. The best way to understand this is to look at the company's cash flow statement.
In this case, Fidus Investment (FDUS) shows a dividend deficit in its cash flow statement. But I will show that it probably doesn't matter, in one sense. The reason is not that the company continuously borrows to finance that deficit. Most BDCs do that.