Net investment income payout ratio
Investment income less expenses — the measure business development companies and closed-end funds distribute out of.
What it measures
A BDC's income is interest and fees on the loans it holds, and it distributes nearly all of it to keep its tax treatment. Payout ratios close to 100% are structural rather than a warning sign.
The number to watch is not the ratio but whether the income itself is being earned or returned — a distribution funded from capital rather than from net investment income is a different proposition, and it is a question this site's figures raise rather than settle.
The distribution
Across every company here whose filings support this basis, whether or not it is the one that applies to them.
| Companies | Lowest | 25th pct | Median | 75th pct | Highest |
|---|---|---|---|---|---|
| 4 | 92.0% | 95.4% | 96.5% | 96.5% | 103.1% |
This is a thin sample. 4 companies is too few for the quartiles above to describe a population — they describe these 4 companies and nothing more. The coverage rating declines to score peer standing below five comparables for the same reason. Read the figures as examples rather than as a distribution.
Where it is the basis that applies
4 companies here are read on net investment income rather than on anything else, because that is what their own filings support. Among them the median payout is 96.5%, a quarter pay out less than 95.4% and a quarter more than 96.5%. They are concentrated in Investment company (4).
Lowest payout
- Ares Capital (ARCC) 92.0%
- Hercules Capital (HTGC) 95.4%
- Oaktree Specialty Lending (OCSL) 96.5%
- Main Street Capital (MAIN) 103.1%
Highest payout
- Main Street Capital (MAIN) 103.1%
- Oaktree Specialty Lending (OCSL) 96.5%
- Hercules Capital (HTGC) 95.4%
- Ares Capital (ARCC) 92.0%
Common questions
What is a net investment income payout ratio?
Investment income less expenses — the measure business development companies and closed-end funds distribute out of.
What is a good net investment income payout ratio?
Across the 4 companies here that report one, the median is 96.5%, with half between 95.4% and 96.5%. A figure is only meaningful against companies measured the same way and in the same sector, which is why the coverage rating is scored within a sector rather than against a fixed band.
How is it calculated here?
From the company's own annual filing, read out of SEC XBRL. Every company page names the accession number each figure came from and links it to EDGAR, so the arithmetic can be checked against the source rather than taken on trust.
The other four bases
The same dividend produces a different ratio on each of them, and the dividend payout ratio page sets out why.