Today we look at a small-cap business development company named Capital Southwest Corp. Its trading ticker symbol is CSWC. This is my first ever report on Capital Southwest Corporation for this portfolio or any of my previous portfolios.

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 to produce attractive risk-adjusted returns by generating current income from debt investments and capital appreciation from equity and equity-related investments. 

It focuses on providing flexible financing solutions through partnerships 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 comprises interest income 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 dividend equities or funds like Capital Southwest Corp:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether a company has made, is making, and will make money. 

CSWC Price

Capital Southwest's price per share closed at $21.56 Friday. A year ago its price was $20.39. Price per share recovered by $1.17 or about 5.7% this past year. 

If  Capital Southwest Corp stock trades in the range of $5 to $25 this next year, its recent $21.56 price might rise by $0.54 to reach $22.10 by February 22, 2022. That's in line with the company's 40-year average price upside. 

CSWC Dividends

Capital Southwest's most recently declared quarterly dividend was $0.52 to be paid out in two parts on March 31st. Dividends are estimated to total $2.08 per share annually and yield 9.65% at yesterday's $21.56 closing price. 

Over the next year at this time, a $1000 investment would generate $96.50 in cash per share. And a single share bought at Friday's closing price was under $22.00! So, if CSWC is your kind of company, the price is where the dividend income from $1,000 invested truly exceeds the single share price. You might have a block of stocks to hold forever, no matter where the price rises or falls. The dividend has increased every year for the past five years.

CSWC Returns

Adding the $2.08 annual CSWC anticipated dividend to my $0.56 price upside shows a $2.64 potential gross gain, per share, to be reduced by any costs to trade the shares.  

Put little under $1,000.00 today in Capital Southwest Corp at $21.56 per share and we'd buy 46 shares of CSWC stock.

A $10 broker fee (if charged) to be paid half at purchase and half at sale might cost us about $0.22 per share.

Subtract that maybe $0.22 brokerage cost from my estimated  $2.64 gross gain per share results in a net gain of $2.42 X 46 shares = $111.32 for an 11.13% net gain on a $991.76 investment.

Capital Southwest Corp shows a possible 11.1% net gain including a 9.65% dividend And now annual yield from $1000 invested is far greater than the single share price (around 4.5 times greater in this case).

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