Fidus Investment: 9% Yield Not Worth The Risk
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Silicone Scrooge Insights389 FollowersFollow5ShareSavePlay(9min)CommentsSummaryFidus Investment is rated hold due to weak dividend coverage and a premium to book value.FDUS's portfolio has shifted toward higher-quality first liens, but rising management fees and interest expenses have compressed NII.Dividend safety is at risk; supplemental dividends are likely unsustainable into 2026 as coverage trends deteriorate.I would only consider FDUS at a discount to book value, specifically below $17.50 per share. We Are/DigitalVision via Getty Images My Hold Thesis For Fidus Investment (FDUS) Fidus Investment is an externally-managed BDC with a record of originating new loans and thereby consistently growing its debt investments. Fidus Investment has a large pool of first-lienThis article was written bySilicone Scrooge Insights389 FollowersFollowI’m a retail investor based in Sydney with three years of experience focusing on achieving financial independence through strategic investments in AI-driven companies. Although I don’t come from a traditional finance background, I’ve developed a strong passion for understanding how artificial intelligence is transforming the global economy. Over the past few years, I’ve become increasingly fascinated by the possibilities of AI—how it’s reshaping industries, driving innovation, and creating new investment frontiers. My portfolio is primarily centered around leading AI-related companies such as NVIDIA and others at the forefront of this technological revolution. I believe we’re only in the early stages of AI’s impact, and the coming decade will present remarkable opportunities for both retail and institutional investors. My goal is to continue learning, sharing insights, and building long-term wealth by investing in the technologies shaping our future.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does FDUS's dividend coverage trend impact its rating?Persistent under-coverage of dividends, especially supplemental payouts, signals elevated risk of a dividend cut, supporting a Hold rather than Buy rating.What portfolio characteristics distinguish FDUS from peers?FDUS maintains a 72% first-lien portfolio and a low 2.8% cost-based non-accrual ratio, indicating lower credit risk than many BDC peers.At what valuation would FDUS become attractive for new investment?I would consider FDUS a Buy only below $17.50, representing a discount to its $19.56 Q3 book value and providing a margin of safety.Recommended For You