Golub Capital BDC Adjusts Payout Amid Shifting Interest Rate Landscape

Golub Capital BDC has announced a reduction to its regular quarterly dividend, a strategic move the business development company attributes to the persistent margin compression affecting its sector. This decision comes even as the firm reported core earnings that aligned precisely with market expectations for its first fiscal quarter of 2026.

For the quarter, Golub Capital BDC posted adjusted net investment income (NII) of $0.38 per share, meeting the consensus forecast among analysts. However, the board of directors declared a new base dividend of $0.33 per share, a decrease from the previous payout of $0.39. Management cited industry-wide headwinds, including declining base interest rates and tighter credit spreads, as key pressures on earnings power.

The company indicated it will maintain its policy of paying supplemental variable dividends. This approach is designed to distribute income that exceeds the base dividend level to shareholders, potentially offsetting the impact of the reduced regular payout in future periods.

Book Value and Portfolio Performance

A key metric for BDCs, the net asset value (NAV) per share, experienced a slight decline. It stood at $14.84 at the end of the calendar year 2025, compared to $14.97 in the prior quarter. The total investment portfolio was valued at approximately $8.6 billion.

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Credit quality was described as stable by the management team. Although non-accrual loans increased modestly to 0.8% of the portfolio at fair value, approximately 88% of the companies in the portfolio were reported to be meeting or exceeding internal performance expectations.

Share Repurchases and Financial Position

In a move to support the per-share NAV, the company was active in buying back its own stock during the quarter. It repurchased 2.6 million shares at an average price of $13.69 per share, for a total outlay of about $35.9 million. This buyback activity contributed roughly $0.01 to the stabilization of the book value per share.

Golub Capital BDC's balance sheet remains robust, with available liquidity of $1.3 billion and a leverage ratio of 1.23x. The first distribution under the new base dividend rate is scheduled for March 30, 2026, to shareholders of record as of March 13, 2026.