PNNT - PennantPark Investment: Dividend Increase Shows Confidence But Investors Should Remain Speculative

2024-06-10 08:00:00 ET

Summary

• PennantPark Investment Corp. reported Q2 earnings with net investment income below consensus but showed modest growth in their overall portfolio.
• The company has a solid portfolio quality but saw its non-accruals tick up during the recent quarter.
• The recent dividend increase is not covered by their current net investment income, but the company has ample liquidity in spillover income to sustain the dividend.
• Management anticipates Nll to grow in the coming quarters, with expected growth in their JV portfolio. Moreover, they suspect Nll will be able to cover the quarterly dividend run rate of $0.24 on a recurring basis.
• Because of their declining Nll on a quarterly and annual basis, I rate PNNT a hold for now.

Introduction

As a dividend investor, I love when my investments give me pay raises in the form of dividends. In the words of Warren Buffett, "I get euphoric..." when this happens. I feel the same, knowing my hard-earned money is being put to good use by placing it in solid businesses that grow their dividends over time....

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