Sixth Street Specialty Lending (TSLX) Q4 2025 earnings summary

Executive summary

• Achieved adjusted net investment income of $2.18 per share and return on equity of 12.7%, both exceeding 2025 guidance; Q4 adjusted net investment income per share was $0.52, providing 113% dividend coverage.

• Net asset value per share at year-end was $16.98, slightly down from Q3, reflecting overearning of the base dividend and portfolio-specific events.

• Maintained a disciplined, diversified portfolio focused on senior, floating rate debt, with 89.2% first-lien and 96.3% floating rate investments.

• Highest investment funding since 2021 and record portfolio repayments, with 34% portfolio turnover, reflecting strong origination and active management.

• Announced a new joint venture, Structured Credit Partners, with Carlyle, targeting fee-free CLO equity investments to enhance earnings accretion.

Financial highlights

• Full-year 2025 adjusted net investment income per share: $2.18; net income per share: $1.76; Q4 adjusted net investment income per share: $0.52.

• Economic return for 2025 was 10.9%, marking the 10th consecutive year of double-digit returns.

• Total investment income in Q4 was $108.2 million; full-year investment income was $449.1 million.

• Debt-to-equity ratio at year-end was 1.10x, within the target range.

• Dividends paid in 2025 totaled $1.99 per share, with an 11.6% book dividend yield.

Outlook and guidance

• Targeting 2026 adjusted net investment income per share of $1.87–$1.95, with a projected ROE of 11%–11.5%.

• Board declared a Q1 2026 base dividend of $0.46 per share and a Q4 2025 supplemental dividend of $0.01 per share.

• Portfolio remains well positioned with high floating rate exposure and strong coverage of dividends by earnings.

• Adjusted NII and ROE on adjusted NII exceeded 2025 guidance ranges of $1.97–$2.14 and 11.5%–12.5%.

• Anticipated returns from the new JV expected to be accretive and support earnings profile.