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Prospect Capital Corporation

Prospect Capital Corporation (PSEC) is a business development company (BDC) that primarily lends to and invests in middle-market companies. The company aims to generate current income and capital appreciation through debt and equity investments.

As of February 2023, PSEC's net asset value (NAV) is approximately $5.2 billion, making it one of the larger BDCs. The company's portfolio consists of over 140 investments, primarily in senior secured loans, but also including mezzanine investments, equity securities, and small business investments.

Prospect Capital has a strong track record of dividend payments, with a current annual dividend yield of around 9.5%. However, it's worth noting that the company has had to cut its dividend in the past due to market conditions and investment performance.

Regarding earnings, Prospect Capital reported net investment income (NII) of $0.19 per share for the quarter ended December 31, 2022, which was flat compared to the same quarter in the previous year. However, the company has reported positive NII for 32 consecutive quarters, demonstrating consistent earnings generation.

In terms of growth, Prospect Capital's NAV has grown at a compound annual rate of approximately 3.5% over the past five years. While this growth rate is not particularly high, it is worth noting that the BDC sector as a whole has faced significant headwinds in recent years, including rising interest rates and increased competition for investments.

Overall, Prospect Capital Corporation is a seasoned BDC with a strong track record of dividend payments and consistent earnings generation. However, investors should be aware of the risks associated with investing in BDCs, including the potential for capital losses, volatility in NAV, and the possibility of dividend cuts.