Prospect Capital's Detailed Dividend And NAV Sustainability Analysis - Part 1 (Includes Remaining Fiscal Year 2019 Monthly Dividend Projection)

Author's Note: This two-part article is a very detailed analysis of Prospect Capital Corp.'s (PSEC) dividend and net asset value ("NAV") sustainability. I have continued to cover this "in-depth" topic due to the number of readers who have specifically requested such an analysis be performed on PSEC at periodic intervals. There was an even greater number of requests for this specific analysis this quarter due to PSEC's recent earnings report. For readers who just want the summarized conclusions/results, I would suggest to scroll down to the "Conclusions Drawn" section at the bottom of each part of the article.
Focus of Article: The focus of PART 1 of this article is to provide a detailed analysis with supporting documentation (via three tests) on the dividend sustainability of PSEC for the remainder of fiscal year 2019 (monthly dividend through June 2019). This analysis will be provided after a brief overview of PSEC's regulated investment company ("RIC") classification per the Internal Revenue Code ("IRC"). I will be performing three dividend sustainability tests within PART 1 of this article. The first test will focus on PSEC's net investment income ("NII"). This test will be termed "TEST 1". The next two tests will focus on PSEC's net investment company taxable income ("ICTI") and cumulative undistributed taxable income ("UTI"). These two tests will be termed... Read more