Saratoga Investment Q3 NII per Share Rises 5.2% as ROE Climbs to 13.5%
Saratoga Investment reported a 5.2% quarter-on-quarter increase in net investment income per share to $0.61 and NAV rose 0.7% to $413.2 million, with NAV per share stable at $25.59. Quarterly ROE hit 13.5%, boosting LTM ROE to 9.7% versus the BDC industry average of 6.6%.
1. Strong Quarterly Financial Performance
Saratoga Investment Corp reported a 5.2% increase in net investment income per share to $0.61 for the quarter ended November 30, 2025, up from $0.58 in the prior period. Net asset value rose by 0.7% to $413.2 million, driven by fair-value gains across the core portfolio. Total investment income increased by $1.0 million quarter-over-quarter to $31.6 million, reflecting steady yield on a $1.016 billion asset base, while earnings per share stood at $0.74 despite higher share count from recent ATM issuances.
2. Robust Return on Equity and Dividend Strategy
The company generated an annualized quarterly return on equity of 13.5%, outpacing the BDC industry average of 6.6%, and delivered a last-twelve-months ROE of 9.7%. Management declared regular dividends totaling $0.75 per share for the third quarter, supplemented by a special distribution of $0.25 per share, bringing total fiscal 2026 dividends to $3.25 per share. This disciplined distribution policy underscores Saratoga’s commitment to providing attractive yield while preserving capital.
3. Active Portfolio Management and Deal Flow
During Q3, Saratoga originated $72.1 million across three new portfolio companies and nine follow-on investments, outstripping $54.9 million of repayments to produce net originations of $17.2 million. The portfolio’s average yield moderated to 10.6% due to rate resets and new lower-yielding commitments, yet overall fair-value appreciation of $2.5 million in non-CLO assets more than offset mark-downs in structured credit holdings. The company maintains $169.6 million in cash to support further accretive investments or debt retirement.
4. High Credit Quality and Capital Structure Resilience
At quarter-end, 99.8% of investments were rated in the highest internal credit category, with only one position on non-accrual (0.2% of fair value). First-lien debt comprised 83.9% of the portfolio, supported by strong sponsor relationships and enterprise values. Regulatory leverage stood at 168.4%, or 183.7% net of cash, reflecting recent baby bond repayments and NAV appreciation. Management highlights that proactive restructuring actions have resolved four challenged assets over two years, positioning the portfolio for stability in volatile markets.