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FS KKR Capital (FSK) yields 26.5% after a 44% stock collapse, with net investment income falling from $937M to $701M and non-accrual loans at 2.9% of fair value. Stellus Capital (SCM) cut its monthly dividend 15% in January 2026 after posting a $21.8M net loss in Q4 2025 and trades at 0.67x book value. Trinity Capital (TRIN) yields 13.7% with growing net investment income of $199M in 2025 versus $164.8M in 2024, rising NAV per share, and only 0.7% non-accrual loans.
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FSK and SCM are cutting distributions due to deteriorating fundamentals, while Trinity is the only BDC among the three with sustainable earnings and growth, though its yield compression from falling interest rates remains a forward risk.
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Three business development companies are flashing yields that stop income investors cold: FS KKR Capital Corp (NYSE:FSK) at 26.5%, Stellus Capital Investment (NYSE:SCM) at 16.7%, and Trinity Capital (NASDAQ:TRIN) at 13.7%. Yields that high are either an opportunity or a warning. In this case, the answer depends heavily on which BDC you are looking at.
FSK’s yield looks extraordinary because the stock has collapsed. Shares are down 44% over the past year to around $10, which mathematically inflates the yield on any fixed distribution. That price decline is the market’s verdict on the underlying fundamentals, and the fundamentals support the concern.
Net investment income has been falling steadily. Full-year NII dropped from $937 million in 2024 to $701 million in 2025, a steep decline in one year. The distribution itself already signaled stress before that trend became undeniable.
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NAV per share eroded from $23.37 to $21.99 in just two quarters. Non-accrual loans, meaning borrowers who have stopped making payments, sat at 2.9% of fair value as of Q3 2025, well above what most BDC investors consider comfortable.
The distribution itself already signaled stress. In Q2 2025, FSK paid out $0.70 per share while earning only $0.62 in NII, meaning the payout exceeded what the company actually earned. The upcoming January 2026 distribution dropped to $0.48 per share, down from the $0.70 quarterly rate maintained throughout 2025. That cut has already arrived.