Monthly Dividend Stock In Focus: Saratoga Investment Corp.

Published on March 23rd, 2026 by Bob Ciura

Monthly dividend stocks have instant appeal for many income investors. Stocks that pay their dividends each month offer more frequent payouts than traditional quarterly or semi-annual dividend payers.

For this reason, we created a full list of over 100 monthly dividend stocks.

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter like dividend yields and payout ratios) by clicking on the link below:

Saratoga Investment Corp. (SAR) is a monthly dividend stock with a high yield.

This potentially makes the stock more attractive for income investors looking for more frequent dividend payouts.

This article will analyze Saratoga Investment in greater detail.

Business Overview

Saratoga Investment Corp is a business development company (BDC) that provides customized debt and equity financing to U.S. middle-market companies.

It focuses on income generation through predominantly senior credit instruments. As of November 30th, 2025, the fair value of its investment portfolio was $1,016.0 million, excluding $169.6 million in cash and cash equivalents.

The portfolio composition by fair value was $852.5 million in first-lien term loans (83.9%), $8.1 million in second-lien term loans (0.80%), $16.3 million in unsecured loans (1.60%), $54.9 million in structured finance securities (5.40%), and $84.4 million in common equity (8.3%).

Holdings span 39 distinct industry classifications, with notable exposures in Healthcare Services (largest single sector) at 9.7% of portfolio fair value, Structured Finance Securities at 7.3%, and Consumer Services at 6.0%.

Its portfolio mix supports a weighted average current yield of 9.7% across all investments. SAR’s strategy emphasizes senior secured credit with selective structured and equity positions to balance yield and risk, supported by substantial liquidity and diversified financing sources.

On January 7th, 2026, Saratoga Investment Corp. reported its fiscal Q3 2026 results. Total investment income declined 11.8% year over year to $31.6 million, reflecting lower base rates and a smaller average portfolio following elevated repayments over the past year.

Net asset value increased to $413.2 million, or $25.59 per share, representing a 0.7% increase quarter over quarter. Net investment income was $9.8 million, or $0.61 per share, representing a 32% decline from $0.90 per share in the prior year period.

The decline was due to lower base interest rates and a smaller average earning asset base following elevated repayments over the past 12 months.

Growth Prospects

From 2016 to 2019, NII/share rose from $1.91 to $2.60 as Saratoga scaled its portfolio meaningfully and grew interest income faster than expenses, despite some gradual yield compression.

The decline in 2020 to $1.59 was driven by a combination of lower portfolio yields, COVID-era rate cuts, and higher expense drag on a larger balance sheet.

In 2021 and 2022 ($2.07 then $1.74), earnings recovered only partially as asset growth continued but base rates were still low and yields remained under pressure, limiting incremental profitability despite a bigger portfolio.

The major inflection came in 2023 and 2024, when NII/share jumped from $2.94 to $4.49, driven by both a much larger portfolio and a sharp increase in asset yields as floating-rate loans reset higher while most liabilities re-priced more slowly, creating strong net interest margin expansion.

In 2025, NII/share declined to $3.81 even though total investment income increased, reflecting some combination of balance sheet contraction, higher funding costs, and margin normalization after the unusually favorable 2024 spread environment.

Moving forward, we believe Saratoga can continue to grow its NII/share by about 1% per year.

Growth will be driven primarily by incremental portfolio growth, continued deployment of its sizable liquidity into high-yielding first-lien loans, and the earnings contribution from its SBIC and CLO platforms.

Growth could be partially offset by higher funding costs, modest competitive pressure on spreads, and the normalization of net interest margins from the unusually favorable 2023–2024 environment.

Dividend & Valuation Analysis

Historically, NII/share has shown notable volatility, peaking in 2020–2021, and then resetting lower in 2022–2024 before partially recovering in 2025.

This record shows that the company’s earnings power expands sharply in favorable rate and credit environments and contracts when spreads and leverage compress.

Today, we believe the stock is undervalued, with a P/NII ratio of 7.3 compared with our fair value estimate of 8.5. An expanding multiple could boost annual returns by 3.5% per year over the next five years.

In addition to 1% expected NII-per-share growth and the 13.7% dividend yield, total returns could reach 14.4% per year over the next five years.

Final Thoughts

Overall, the company offers a compelling, high-yielding income platform built on a senior-secured lending strategy, but investors should remain mindful that earnings and dividends can still come under pressure in severe downturns.

In any case, we forecast annualized returns of 14.4% over the medium term, driven by the dividend yield, our growth forecast, and the possibility of a multiple expansion. Saratoga earns a hold rating.

Additional Reading

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.