Apollo Investment Earnings: A Changing Portfolio

Business development company (BDC) Apollo Investment Corporation (NASDAQ: AINV) reported its fiscal first-quarter earnings, revealing that it covered its dividend with net investment income, despite a slight decrease in net investment income compared to the year-ago period.

Business development company earnings can generally be measured in two ways. The first measure is net investment income (also called net operating income), which includes all sources of income and expenses, excluding any capital gains or losses. The second measure is net income, which is net investment income, plus or minus capital gains or losses.

Net investment income is generally viewed as a barometer for the health of a BDC's dividend over the short term (a few quarterly reporting periods), as it excludes capital gains and losses that can result from fluctuations in investment values that may be related to technical factors, rather than the portfolio's true value over the long haul. (In the context of your own personal stock portfolio, you likely wouldn't think of a 5% change in value over the course of a quarter as meaningful to the investment thesis over the next five years, for example.)

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Source: Fool.com