Prospect Capital reported Q4 2026 net investment income (NII) of $0.15 per share, surpassing Wall Street estimates by $0.04. Despite this, the company faced a contraction in its portfolio and a decline in net investment income compared to the previous year. The recent dividend cut to $0.035 per share improved dividend coverage to over 130%, supported by stable asset quality with a low 0.7% non-accrual rate. The portfolio now consists of 72.5% first-lien loans, enhancing quality and potentially easing concerns over recent NAV declines and dividend reductions. Prospect Capital shares trade at a steep 62% discount to NAV, but a stable dividend and controlled portfolio contraction could lead to repricing.
