A Warning for Retirees: Stellus Capital Investment's High Yield Dividend May Not Be as Safe as It Seems

Stellus Capital Investment (SCM) cut its monthly dividend from $0.1333 to $0.1133 per share in January 2026, its first reduction in 13 years, due to a $21.8M net loss in Q4 2025 and declining NAV. The share price has fallen 29% year-to-date. SCM's income from floating-rate loans is being compressed as the Fed funds rate has fallen 0.75 percentage points over the past year, reducing spreads and interest income. Despite the high yield, retirees should pause before buying due to declining earnings.