PSEC vs SAR: Which BDC is the Better Dividend Buy?
A side-by-side comparison of Prospect Capital Corporation (PSEC) and Saratoga Investment Corp. (SAR) — dividend yield, NAV premium/discount, market cap, and price-to-NAV valuation.
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As of 09/04/2026: PSEC 22.4% yield vs SAR 18.4% — NAV -67.4% vs -37.2%, leverage 0.95x vs 1.24x. Side-by-side table below.
PSEC vs SAR: Key Metrics Head-to-Head
| Metric | PSEC | SAR | Edge |
|---|---|---|---|
| Dividend Yield | 22.42% | 18.42% | PSEC |
| Premium / Discount to NAV | -67.45% | -37.22% | SAR |
| Market Capitalization | $2.1B | $0.4B | PSEC |
| Trailing Stock Price | $2.23 | $17.64 | — |
| Net Asset Value (NAV) | $6.85 | $28.1 | — |
| Price vs NAV (Valuation) | Discount | Discount | SAR |
| Dividend Frequency | Monthly | Quarterly | — |
| Leverage Ratio | 0.95x | 1.24x | PSEC |
About PSEC — Prospect Capital Corporation
Prospect Capital Corporation is one of the oldest publicly traded BDCs, having operated since 2004. PSEC is known for its monthly dividend payments and a diversified investment strategy that spans senior secured loans, mezzanine debt, and equity investments. The company focuses on companies with stable cash flows and tangible asset bases. PSEC has a notable track record of consistent monthly distributions.
About SAR — Saratoga Investment Corp.
Saratoga Investment Corp. is an externally managed BDC that provides senior secured debt, mezzanine debt, and equity co-investments to U.S. middle-market companies. SAR targets disciplined underwriting with a strong emphasis on collateralization and floating-rate loan structures. The portfolio is concentrated in technology, healthcare, and business services sectors, and the BDC is known for maintaining a high dividend payout ratio.
How to Choose Between PSEC and SAR
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 PSEC and SAR 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.