Stellus Capital Investment Corporation

For the second quarter ended June 30, 2026, Stellus generated $0.26 per share of GAAP net investment income; core net investment income, excluding estimated excise taxes, was also $0.26 per share. NAV increased by $0.26 per share, or 2% sequentially, driven by $0.30 per share of net realized and unrealized gains, about $0.05 per share from share repurchases, and a $0.08 per share dividend over-earnings offset from spillover income distributions. The investment portfolio ended at fair value of $968 million across 116 portfolio companies, compared with $990 million across 116 companies at March 31, 2026. For Q3, the dividend was set at $0.25 per share, and management said it expects to be well positioned to earn that dividend or more moving forward. It also said repayments are expected to slightly outpace new fundings for the balance of the quarter, leaving the portfolio slightly down from current levels, though origination activity is improving toward the end of the year.

Robert Ladd emphasized that the business is moving into a more productive origination environment, with seasonality and a pickup in sponsor activity supporting a better back half of the year. He said the Ridgepost/RCP relationship should broaden access to sponsor relationships over time, though he noted that near-term activity is still coming mainly from Stellus’s existing origination channels. He also framed the new $0.25 dividend as aligned with current NII and said the company expects to generate attractive income through the cycle.

Todd Huskinson said Q2 GAAP and core NII were both $0.26 per share, with NAV up 2% sequentially. He highlighted life-to-date scale of about $2.9 billion invested across more than 225 portfolio companies, about $1.9 billion of repayments received, $349 million of dividends paid since IPO, and a life-to-date return on equity of 9.5%. On the quarter’s portfolio, he noted $18 million invested, $38.7 million of full repayments, and 5 nonaccrual loans representing 8.5% of cost and 5.4% of fair value. He also explained that lower sweep income mainly reflected carrying less cash than historically.

Analysts focused on what is driving the stronger pipeline, and management pointed to seasonality, stable pricing discipline, and early benefits from the Ridgepost/RCP relationship. On nonaccruals, management said most of the remaining problem assets are now controlled by Stellus and the other lenders, with restructurings already done and attention shifting to operational improvement and eventual exit. Management also said leverage could increase over time, especially as the third SBIC license ramps, and noted that roughly $50 million of nonaccruing assets and about $90 million of equity co-invests could eventually be recycled into earning assets.