Source Capital Announces $0.2083 Dividend; Strong Historical Price Recovery Observed on Ex-Dividend Date

Introduction

On August 14, 2025, Source Capital (SOR) announced a cash dividend of $0.2083 per share, with the ex-dividend date set for the same day. The company’s consistent and robust earnings performance, as reflected in its latest financial report, supports its ability to sustain this dividend. Compared to industry standards, SOR’s payout strategy aligns with a balanced approach of maintaining profitability while rewarding shareholders. With a stable macroeconomic environment and strong cash flow generation, the company is well-positioned to maintain this pace of distributions.

Dividend Overview and Context

Understanding dividend metrics is essential for investors aiming to assess the sustainability and impact of payouts. For SOR, the cash dividend of $0.2083 per share reflects a disciplined and consistent approach to shareholder returns. The ex-dividend date on August 14 marks the point at which new buyers of the stock will no longer be entitled to the dividend, typically resulting in a share price adjustment on the order of the dividend amount.

Historically, the company has demonstrated strong price normalization after ex-dividend dates, with minimal long-term impact to share value. This behavior is beneficial for investors employing dividend capture strategies.

Backtest Analysis

The backtest of SOR’s dividend events over the past 37 occurrences reveals a compelling pattern of price recovery. On average, the stock recovers the dividend impact in just 0.73 days, and all instances show 100% recovery within 15 days. These results suggest that the market quickly incorporates the dividend into the stock price, with no material long-term drag.

• Methodology: The backtest analyzed SOR’s dividend events, including price behavior before, on, and after the ex-dividend date. It assumed a simple reinvestment of the dividend into the same stock within the recovery window.
• Results:
  • Average recovery duration: 0.73 days
  • 100% price normalization within 15 days
  • High confidence in consistent dividend impact normalization

Driver Analysis and Implications

Source Capital’s ability to pay consistent dividends is supported by strong internal financial performance. The company’s latest financial report shows:

• Total Revenue: $20.59 million
• Operating Income: $16.92 million
• Net Income: $39.16 million
• EPS: $4.78

These figures highlight strong profitability and suggest a healthy payout ratio, supporting the sustainability of the dividend. Given the broader economic environment—favorable for capital-light business models—Source Capital is well-positioned to maintain its dividend trajectory.

Investment Strategies and Recommendations

• Short-Term Strategy: Investors may consider a dividend capture approach, buying shares before the ex-dividend date and selling shortly after to capture the $0.2083 payout. The historical data supports the likelihood of swift price normalization.
• Long-Term Strategy: For income-oriented investors, SOR offers a reliable and growing yield when combined with its strong earnings and balance sheet position.

Given the low volatility and strong historical price recovery, SOR remains a viable option for both passive income and tactical strategies.

Conclusion & Outlook

Source Capital’s latest dividend announcement of $0.2083 per share, effective as of the ex-dividend date on August 14, reflects the company’s commitment to shareholder returns. The company’s strong earnings performance and historical price normalization patterns make it a compelling candidate for both dividend capture and long-term income strategies. Investors should monitor the next earnings report for confirmation of continued financial strength and potential for future dividend increases.