Saratoga Investment Corp 850 (SAZ) delivered a solid QQ2 2026 operational and portfolio performance, underscored by NAV growth and resilient fundamentals in a volatile macro environment. NAV at quarter-end stood at $410.5 million, driving NAV per share to $25.61, up 3.6% QoQ and supported by a 2026 annual base dividend of $0.75 per share (yielding approximately 12.3% at the Oct-6, 2025 price of $24.41). Q2 adjusted NII totaled $9.1 million ($0.58 per share), reflecting pressure from lower base rates and higher cash balances from repayments, with an adjusted NII yield of 9% for the latest twelve months. Management emphasizes continued portfolio resilience, an expanding but disciplined pipeline, and substantial liquidity, including $201 million in cash and $406.8 million of dry powder, enabling accretive deployment without external financing.
Key operational takeaways include: (1) portfolio fundamentals remain robust, with 84.3% of investments in first-lien debt and nonaccrual at 0.2% of fair value, following the return of Xolage to accrual status and the restructuring of Pepper Palace; (2) liquidity and capital deployment capacity are strong, with $407 million of investment capacity, $201 million cash, and undrawn low-cost financing options, supporting potential NAV and NII growth; (3) ongoing discipline in underwriting and portfolio management evidenced by a 0.3% nonaccrual rate (vs. 3.4% industry average) and a diversified, underpenetrated deal flow in the lower middle market.
Looking ahead, the Board intends to evaluate the quarterly dividend with a framework that balances near-term earnings with long-term NAV accretion. The company projects that deployable capital (roughly 40% of assets within current capacity) can meaningfully contribute to NII and dividend coverage as originations resume in a potentially improving M&A environment. The near-term risk set centers on rate volatility, origination timing, and competition for deals, but SAZ’s liquidity, diversified portfolio, and legacy of NAV growth provide a constructive backdrop for potential upside through accretive investments and continued earnings power.