Capital Southwest Corp, known by the ticker symbol CSWC, is a small cap asset management company in the financial services business sector. This is my first report on CSWC for my Viital stock portfolio. I have not reviewed CSWC since February 22 when I considered it for the twenty fifth slot in my Vista portfolio (the sixth of seven collected so-far).

Capital Southwest Corp is a US-based investment company that specializes in providing customized financing to middle market companies across various industries. 

The company's investment objective is to produce attractive risk-adjusted returns by generating current income from debt investments and capital appreciation from equity and equity-related investments. 

Image Source: Pixabay

It focuses on providing flexible financing solutions through partnership with business owners, management teams, and financial sponsors. The company's portfolio may include senior debt, second lien and subordinated debt, preferred stock and common stock and warrants. 

The primary source company's revenue interest and dividend income from investments made as well as management fees.

The firm has the flexibility to hold investments for a very long period in its portfolio companies. It may also invest through warrants. The firm prefers to take Board participation in its portfolio companies. Capital Southwest Corporation was founded on April 19, 1961, and is based in Dallas, Texas.

Three key data points gauge any dividend equity or fund such as Capital Southwest Corp (CSWC):

(1) Price

(2) Dividends

(3) Returns
Those three basic keys best tell whether any company has made, is making, and will make money. 

CSWC Price

Capital's price per share was $24.62 as of yesterday's market close. One year ago its price was $16.54 Thus, Capital's share price rose nearly 49% in the past year.

If Capital's stock trades in the range of $20.00 to $30.00 this next year, its recent $24.62 share price might rise by $3.38 to reach $28.00 by December 22, 2022. My estimate is $0.07 higher than the median annual 1yr price target from 7 brokerage analysts tracking CSWC for brokerages

CSWC Dividends

Capital's most recent quarterly dividend of  $0.97  will pay out December 31st, to shareholders of record December 14th. That dividend, and those to to come I estimate, will equal $1.94 annually and yield 7.88% per yesterday's $24.62 closing price. 

Capital Southwest Corp (CSWC) has paid quarterly dividends increasing annually since May 30,1985. That will be 37 years come May.

CSWC Returns

Adding the $1.94 annual estimated Capital Southwest Corp forward-looking dividend to my $3.38 price upside estimate shows a $5.32 potential gross gain, per share, to be reduced by any costs to trade CSWC shares.  

At yesterday's $24.62 price per share, a little over $1000 would buy 41 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at sale and might cost us about $0.24 per share.

Subtract that maybe $0.24 brokerage cost from my estimated $5.32 gross gain per share results in a net gain of $5.08 X 41 shares = $208.28 for a 20.8% net gain on a $1,009.42  investment.

So it is that Capital Southwest Corp (CSWC)  shows a possible 20.8% net gain including a 7.88% forward estimated dividend yield. 

Over the next year at this time, a $1000 investment in Capital Southwest Corp (CSWC) could generate $78.80 in cash dividends alone. Note that a single share of CSWC share bought at yesterday's closing price was $24.62. Therefore, CSWC  share price is more than three times below the dividend income from $1000.00 invested. Thus, according to my dogcatcher ideal, now is a prime time to pick up Capital Southwest Corp (CSWC)  shares. The estimated next-year dividend from $1K invested is  3.2 times Capital's single share price. Consider yourself alerted. It's a sign!  

All of the estimates above are speculation based on the past history of Capital Southwest Corp (CSWC). Only time and money invested in this stock will determine its market value.