Stellus Capital Investment (SCM) Q1 2026 earnings summary

Executive summary

• Net investment income for Q1 2026 was $7.5 million ($0.26 per share), with core NII at $0.27 per share and net realized income at $0.29 per share; portfolio fair value was $990 million across 116 companies, primarily in first lien debt.

• Net asset value per share was $12.54 at March 31, 2026, with shares trading at a 25% discount to NAV or 0.76x NAV.

• Distributions declared for Q1 2026 totaled $0.34 per share, with a current annualized dividend yield of 13.9%.

• Portfolio is diversified across business services, healthcare, and high tech, with 99% in first lien/senior secured debt and 92% floating rate loans.

• Six loans were on non-accrual, representing 9.2% of cost and 5.2% of fair value.

Financial highlights

• Total investment income for Q1 2026 was $23.3 million, with weighted average yield on new debt investments at 9.4%.

• Net realized gains were $0.8 million, and net unrealized depreciation was $6.5 million.

• Operating expenses (net of fee waivers) were $15.8 million, with management fees at $4.4 million and borrowing-related fees at $8.9 million.

• Portfolio turnover for Q1 2026 was 2.77%.

• Cumulative dividends declared since IPO reached $18.83 per share.

Outlook and guidance

• Regular monthly dividends of $0.1133 per share declared for Q2 2026, with no return of capital expected.

• Portfolio expected to remain around $970 million for Q2 2026, with repayments matching new fundings.

• Dividend expected to align with net investment income plus realized gains over time, likely at a lower level than current dividends.

• Non-accrual levels expected to improve toward year-end 2026 or early 2027, with resolutions typically taking 12–24 months.

• Management notes ongoing macroeconomic uncertainty due to labor shortages, inflation, and geopolitical instability.