Saratoga Investment: Can It Sustain Its 13% Dividend Amid Earnings Pressure?

The core of the problem is a sharp earnings contraction. Adjusted Net Investment Income (NII) per share plummeted 50.1% year-over-year to $0.58. This dramatic drop stems from two forces: a prolonged decline in short-term interest rates and the repayment of existing loans within the portfolio. The result is a dividend that now significantly exceeds current earnings. With a quarterly payout of $0.75 per share, the company is covering its dividend with less than 78 cents of current income per share, a coverage ratio that is clearly under pressure.