Sixth Street Specialty

TSLX

Market cap $1.82B

I have gathered 20 BDC short interest statistics. What I found out surprised me - i.e., my top (quality) BDC picks are among the most shorted ones. In the article I've unpacked this situation and explained the potential drivers from the short sellers' perspective.

Sixth Street Specialty Lending is upgraded from Hold to Buy, driven by robust dividend coverage and a justifiable 8.4% premium to NAV. TSLX's fundamentals remain solid with a 10% yield, 113% dividend coverage, and strong liquidity, despite recent declines in net investment income and NAV. Portfolio risk remains contained with non-accruals under 1% and a declining leverage ratio, but economic uncertainty and war-related risks warrant caution.

I spotlight 35 low-priced Dividend Power 'dogs' with robust yields and reasonable valuations, emphasizing six 'safer' picks where free cash flow covers dividends. Analyst forecasts project 41.67% to 96.55% net gains for the top ten Dividend Power stocks by April 2027, with an average estimated return of 59.49%. All 35 Dividend Power stocks show annual dividends from $1,000 invested exceeding their single share prices, underscoring attractive yield-to-price dynamics.

Stress is building in the private credit sector, but some analysts see a buying opportunity in publicly traded business development companies.

The higher yields we choose, the more risks we introduce in our portfolios. Usually, the double-digit level is the tipping point from which the risks start to increase exponentially. The 14%+ yielding zone is very dangerous (packed with many landmines and only few areas of safety).

NEW YORK--(BUSINESS WIRE)--Sixth Street Specialty Lending, Inc. (NYSE: TSLX) (“TSLX” or “the Company") announced today that it will release its financial results for the first quarter ended March 31, 2026 on Tuesday, May 5, 2026, after the market closes. TSLX invites all interested persons to its webcast / conference call on Wednesday, May 6, 2026 at 8:30 a.m. Eastern Time to discuss these results. Conference Call Information: The conference call will be broadcast live in listen-only mode at 8:.

Ares Capital Corp. (ARCC) and Capital Southwest Corp. are top BDC picks, offering >10% yields, skilled management, and strong financials. Low leverage and above-average ROE, not P/NAV discounts, are critical for BDC selection and risk mitigation. Current market fears around private credit stem from asset quality doubts, leverage risks, and potential systemic contagion.

Sixth Street Specialty is upgraded to a buy after a 20% price drop, presenting a compelling value opportunity. It can be treated as a buy-the-dip case. Investors may miss it in their presentation, but TSLX's portfolio has 40% exposure to software businesses. Still, key metrics remain strong, and the market is likely overreacting.

Sixth Street Specialty Lending is maintained at a hold rating due to insufficient growth catalysts despite a deeper discount to NAV. TSLX's portfolio remains resilient with a low non-accrual rate (0.6%) and strong dividend coverage, but net investment activity and earnings are declining. Dividend yield stands at 11.2% with 115% coverage, supported by $1.21 per share in spillover income, providing a buffer for payouts.

Many BDCs already have cut their dividends by an average of 20%. Some of those that are still holding their dividend untouched could likely preserve such levels going forward. However, there are several high-quality names out there, which I doubt would be able to sustain the current dividends going forward.