TSLX - Sixth Street Specialty Lending: An 8.7% Dividend Worth Considering
2024-07-16 18:34:05 ET
Summary
- Given the prospect of falling interest rates, investors may turn to high yield investments like BDCs, with dividend yields in the 8-10% range.
- Sixth Street Specialty Lending Inc. is analyzed in 6 key areas for investment potential in the BDC sector.
- There is fee structure alignment with shareholders, almost all investments are first lien, and TSLX has proven to preserve net asset value over time.
- The cost of leverage is based on floating rates, and the asset portfolio is heavily tilted towards non-cyclical industries and is strongly diversified.
- Balance sheet leverage should be monitored, as recently, there has been slight evidence of reaching for more leverage.
As we all know, the Federal Reserve has raised rates to 5.00-5.25% recently in a monetary tightening effort to slow down inflation. When the interest rate is higher, we are more tempted to invest in a high yield savings account to get that slice of that cake. However, the window of opportunity will soon be closing. As inflation rates fall, the Fed will eventually scale back interest rates, with an eventual goal of a paltry 2.00-2.50% rate....
Sixth Street Specialty Lending: An 8.7% Dividend Worth Considering