CSWC vs PFLT: Which BDC is the Better Dividend Buy?
A side-by-side comparison of Capital Southwest Corporation (CSWC) and PennantPark Floating Rate Capital Ltd. (PFLT) — dividend yield, NAV premium/discount, market cap, and price-to-NAV valuation.
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CSWC vs PFLT: Key Metrics Head-to-Head
| Metric | CSWC | PFLT | Edge |
|---|---|---|---|
| Dividend Yield | 10.52% | 16.5% | PFLT |
| Premium / Discount to NAV | 9.95% | -26.77% | CSWC |
| Market Capitalization | $1.2B | $0.45B | CSWC |
| Trailing Stock Price | $24.3 | $7.25 | — |
| Net Asset Value (NAV) | $22.1 | $9.9 | — |
| Price vs NAV (Valuation) | Premium | Discount | CSWC |
| Dividend Frequency | Quarterly | Quarterly | — |
| Leverage Ratio | 1.25x | 1.2x | PFLT |
About CSWC — Capital Southwest Corporation
Capital Southwest Corporation is one of the longest-operating BDCs, with roots dating back to 1961. CSWC provides senior secured loans, mezzanine debt, and equity co-investments to lower middle-market companies. The company focuses on businesses with EBITDA between $3 million and $25 million. CSWC is known for its internally managed structure, which aligns management interests with shareholders and typically results in lower expense ratios.
About PFLT — PennantPark Floating Rate Capital Ltd.
PennantPark Floating Rate Capital Ltd. is an externally managed BDC advised by PennantPark Investment Advisers, focused on floating-rate senior secured loans to U.S. middle-market companies. PFLT is designed for an interest-rate-sensitive environment, with a portfolio of predominantly first lien floating-rate instruments that reset with benchmark rates. The BDC targets companies with EBITDA between $5 million and $25 million.
How to Choose Between CSWC and PFLT
When comparing two Business Development Companies, the right choice depends on your income objective:
- Dividend yield matters most for immediate income — the higher yielder wins on cash flow, but make sure it's covered by investment income.
- NAV premium/discount matters for valuation — a discount to NAV implies you're buying assets below their accounting value, a premium implies the market expects above-average growth.
- Market cap reflects liquidity and scale — larger BDCs typically have lower borrowing costs and better portfolio diversification.
- Leverage cuts both ways — it amplifies dividend yield but increases sensitivity to credit defaults and interest rate moves.
Both CSWC and PFLT are Regulated Investment Company (RIC)-structured BDCs required to distribute at least 90% of taxable income to shareholders, which is what produces their above-average dividend yields. Use the comparison table above as a starting point, then read each full profile before making an investment decision.
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Not Investment Advice: This comparison is for educational and informational purposes only. Nothing here constitutes a recommendation, solicitation, or investment advice to buy or sell any security. Past performance does not guarantee future results. Always conduct your own due diligence and consult a licensed financial advisor. Read our full Editorial Policy and Terms of Service.