Apollo Investment: 12% Yield Supported By Improving Portfolio Quality

Current BDC Yields
As mentioned in previous articles, Business Development Companies ("BDCs") are priced based on expected returns to shareholders including regular and special dividends as well as realized capital gains and growing book values. The average BDC yield after taking into account special dividends is around 10% annually. BDCs with higher yields usually implies higher risk and/or expected credit issues driving dividend cuts and lower book values. Also mentioned in previous articles, I am expecting a handful of BDCs to announce dividend reductions in 2019 including MCC and TCRD as predicted in "Dividend Cuts For The BDC Sector" and dividend increases including TCPC discussed in "Dividend Increases For The BDC Sector: Part 5".
This article discusses the recently reported results for Apollo Investment (OTC:AINV) that is currently yielding around 12%:

Source: SEC Filings and www.bdcbuzz.com

AINV Dividend Coverage Update
For the quarter ended December 31, 2018, AINV reported between my base and best case projections, covering its dividend with slower-than-expected portfolio growth due to $291 million of sales repayments offset by only $305 million of new investments that were 98% into its “core strategies” that now account for 80% of the portfolio (previously 78%). The company repurchased 1.5 million shares at 24% discount to the previously reported net asset value ("NAV") resulting in an increased debt-to-equity ratio of 0.76 as... Read more