Printed on Could fifth, 2026 by Bob Ciura
On the floor, month-to-month dividend shares are extremely interesting for earnings traders.
That’s as a result of these specific dividend shares pay their dividends each month, as an alternative of as soon as per quarter like most dividend-paying shares.
Month-to-month dividend shares present shareholders with 12 dividend funds per 12 months, which might be engaging for traders in search of extra frequent payouts.
You may obtain our full Excel spreadsheet of 119 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink beneath:
Capital Southwest Corp. (CSWC) is a month-to-month dividend inventory with a really excessive yield.
In fact, traders ought to look additional into an organization’s monetary situation and future outlook.
This text will analyze CSWC in better element.
Enterprise Overview
Capital Southwest Company is an internally-managed funding Enterprise Growth Firm, or BDC.
The corporate makes a speciality of offering personalized debt and fairness financing to decrease center market (LMM) firms and debt capital to upper-middle market (UMM) firms situated primarily in the USA.
On February 2nd, 2026, Capital Southwest reported its fiscal Q3-2026 outcomes for the interval ending December thirty first, 2025. CSWC’s fiscal 12 months ends on March thirty first.
In the latest quarter, Capital Southwest’s complete funding earnings rose to $61.4 million from $56.9 million, pushed by portfolio development and secure money yields, partially offset by decrease price earnings.
PIK curiosity remained properly managed, supporting earnings sturdiness. The weighted common debt yield edged right down to 11.3% from 11.5% as a result of portfolio combine and repayments.
Pre-tax internet funding earnings was $34.6 million, or $0.60 per share, versus $34.0 million, or $0.61, reflecting greater common shares excellent.
Undistributed taxable earnings declined to $1.02 per share after supplemental dividends, whereas common dividends remained absolutely coated and cumulative dividend protection continues to exceed 100%.
CSWC’s credit score portfolio expanded to 132 lower- and upper-middle-market firms, up from 126 within the prior quarter.
The roughly $2.0 billion funding portfolio stays closely weighted towards 1st lien secured debt, which
represents the overwhelming majority of credit score holdings.
Portfolio diversification stays robust throughout greater than 20 industries, with Healthcare Companies, Media & Advertising and marketing, and Meals/Agriculture & Beverage persevering with to rank among the many largest sector exposures.
For FY2026, we count on NII/share of $2.35.
Progress Prospects
Capital Southwest’s annual internet funding earnings per share has risen from $0.61 per share in 2017, to an estimate of $2.35 for 2026.
In flip, shareholders have obtained a excessive yield, as is typical for BDCs. CSWC’s extended historical past as a BDC firm, and skilled administration group, have allowed it to maintain a double-digit funding yield more often than not.
The corporate has refinanced its personal loans at decrease charges over time, leading to greater internet funding earnings.
Moreover, with solely 30 staff, working bills as a share of complete property have additionally been declining. They have been 4.9% in FY2016, however are at the moment lower than half this quantity at 1.7%.
The upper dividends seen over the previous few years are as a result of particular dividends that the corporate can afford from extra beneficial properties (e.g., fairness gross sales), which aren’t recorded as funding earnings.
Because of this, each the supplemental and particular dividends are technically coated. We count on each NII/share and the bottom per-share dividend to develop by round 1% per 12 months over the following 5 years.
Dividend & Valuation Evaluation
On July twenty third, 2025, Capital Southwest declared a base month-to-month dividend of $0.1934 (switching from quarterly funds). The bottom annualized dividend stays at $2.32 per share.
For 2026, we estimate a dividend payout ratio of 99% when it comes to NII-per-share. Usually, this could be a crimson flag.
However Capital Southwest’s dividend needs to be thought-about safer than its 99% payout ratio implies, contemplating the supplemental payouts, the particular payouts, and the newest quarterly dividend enhance.
The payout ratio doesn’t embrace the realized beneficial properties which are within the type of non-investment earnings, ensuing within the abnormally excessive determine.
CSWC is at the moment buying and selling at a 2026 price-to-NII ratio of 10.3, which is barely above our truthful worth estimate of 10.
A declining valuation a number of might cut back annual returns by 0.5% per 12 months. Offsetting this shall be estimated NII-per-share development of 1% per 12 months, in addition to the 9.6% dividend yield.
Total, complete returns are estimated at 8.7% per 12 months over the following 5 years.
Remaining Ideas
Capital Southwest is a diversified enterprise growth firm and one of many oldest out there, having navigated via quite a few financial cycles.
Its financials have been rising quick following the 2015 spinoff, and its optimum financing prices have resulted in a prudent portfolio enlargement.
We forecast annualized returns of 8.7% per 12 months, excluding any supplementary dividends, powered primarily by the inventory’s hefty dividend yield, and modest enterprise development.
We charge the inventory as a maintain as a result of elevated dividend threat.
Extra Assets
Don’t miss the sources beneath for extra month-to-month dividend inventory investing analysis.
And see the sources beneath for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.
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