Capital Southwest Corp,  ticker CSWC, is a small-cap Texas asset management company operating in the financial services business sector. This is the first of five financial candidates competing for the forty-eighth slot in my Viital folio. It is my second report on CSWC for my Viital portfolio; I last discussed the company on December 22.

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

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 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 comprises of interest income and dividend income from investments made as well as management fees.

The firm has the flexibility to hold investments for 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 Corporation:

(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 Southwest’s price per share was $20.36 as of Friday's market close.  One year ago its price was $26.34. Thus, CSWC’s share price fell by $5.98, or about 23% in the past year.

If Capital Southwest’s stock trades in the range of $16.00 to $28.00 this next year, its recent $20.36 share price might rise by $3.14 to reach $23.50 by next year. My $3.14 upside estimate is equal to the median of one-year targets from six analysts covering CSWC for brokers.

CSW Dividends

Capital Southwest’s most recently declared quarterly dividend of $0.50 is payable September 25th to shareholders on record as of August 31st.

Since May 30, 1985, CSWC has paid quarterly dividends increasing annually.  The current forward looking annual dividend of $2.00 projects an annual yield 9.82% as of yesterday’s $20.36 share price.

CSWC Returns

Adding the $2.00 CSWC annual dividend to my estimated one-year price upside estimate of $3.14 shows a $5.14 potential gross gain, per share, to be reduced by any costs to trade CSWC shares.

At yesterday's $20.36 closing price, a little under $1000 would buy 49 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at sale and might cost us $0.20 per share.

Subtract that maybe $0.20 brokerage cost from my estimated $5.14 gross gain estimate per share results in a net gain of $4.94 X 49 shares = $242.06, for a 24.2% net gain including a 9.82% forward looking annual dividend yield.

Over the next year our $1K investment in Capital Southwest shares could generate $98.20 in cash dividends. Of course, a single share of CSWC stock bought at yesterday's $20.36 price is almost  five times less than the dividend income from our $1000.00 investment.

So, by my dogcatcher ideal, this is a positive time  to acquire CSWC shares based on their forward looking dividends for the year 2022. The forecast annual dividend from $1K invested is 4.82 time greater than yesterday’s single share price. Consider yourself alerted. Now is the time.

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

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