MidCap Financial's Large Discount To NAV And Double-Digit Dividend Yield

2026-03-03 07:03:53 ET

While MidCap Financial ( MFIC ) is currently paying out a double-digit dividend yield, the recent dividend cut on the back of a sequential drop in coverage has added the BDC to a growing list of BDCs trading at a steep discount to net asset value ("NAV") per share as the macro backdrop continues to be defined by market fears around disruption to software companies from AI. This has been termed the SaaSpocalypse, and the largest industry of MFIC's investment portfolio was credit underwritten to software companies. The BDC's total investment portfolio as of the end of its recently reported fiscal 2025 fourth quarter was $3.17 billion at fair value, with an 11.4% allocation to software. This portfolio generated fourth-quarter total investment income of $78.36 million , down 4.6% versus its year-ago comp and a small miss on consensus estimates. The BDC last declared a quarterly cash dividend of $0.31 per share , an 18.4% decline from its prior distribution, and $1.24 per share annualized for a 12.8% dividend yield. This cut also adds MFIC to a list of BDCs that have recently cut their dividend, including Golub Capital ( GBDC ), BlackRock TCP Capital ( TCPC ), and Stellus Capital ( SCM )....

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