Prospect Capital offers 21.7% yield but faces asset losses and dividend cuts, signaling risk for income investors.

Prospect Capital Corporation currently pays a high 21.7% annualized yield through monthly dividends, attracting income-focused investors. However, despite the dividend being covered by net investment income today, the company has faced significant realized and unrealized losses totaling around $675 million over the past year, eroding its asset base and net asset value (NAV). The NAV per share has steadily declined from $7.84 to $6.21 in a year, and the dividend has been cut twice in the past decade, indicating sustainability concerns. While insider buying and a manageable debt maturity in late 2026 offer some optimism, ongoing portfolio shrinkage and yield compression due to falling base rates suggest caution for investors seeking stable income and capital preservation.