Published on October 16th, 2025 by Felix Martinez
Investors seeking high yields may consider purchasing shares of Business Development Companies, also known as BDCs. These stocks frequently have a higher dividend yield than the broader stock market average.
Some BDCs even pay monthly dividends.
You can download your free full list of all high dividend stocks with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:
Oxford Square Capital Corporation (OXSQ) is a Business Development Company (BDC) that pays a monthly dividend. Oxford Square is also a highly yielding stock, with a yield of nearly 21% based on expected dividends for fiscal 2025.
Business Overview
Oxford Square Capital Corp. is a Business Development Company (BDC) specializing in financing early- and middle-stage businesses through loans and Collateralized Loan Obligations (CLOs). You can see our full BDC list here.
The company holds a well-diversified portfolio of First–Lien, Second–Lien, and CLO equity assets spread across seven industries, with the highest exposure in business services and software, at 30.2% and 27.9%, respectively.
Source: Investor Presentation
The company reported second-quarter 2025 results showing modest declines in income and net asset value (NAV). The company’s NAV per share slipped slightly to $2.06, down from $2.09 in the prior quarter, while net investment income (NII) totaled $5.5 million ($0.08 per share), down from $6.1 million ($0.09 per share) in Q1. Total investment income fell to $9.5 million from $10.2 million, reflecting lower yields from its CLO equity investments and debt portfolio. OXSQ also declared monthly dividends of $0.035 per share for October, November, and December 2025, maintaining its consistent payout policy.
For the quarter, Oxford Square recorded a net increase in net assets of $4.4 million, including realized losses of $2.4 million and unrealized appreciation of $1.3 million. The company continued its “at-the-market” share issuance program, raising $11.6 million in net proceeds, and ended the quarter with 76.2 million shares outstanding. Looking ahead, management remains focused on navigating a high-rate environment by maintaining disciplined portfolio management and strong liquidity. While near-term income generation remains solid, the company’s outlook will depend on credit conditions and CLO market performance, both of which may pressure yields in the coming quarters.
Growth Prospects
The company’s investment income per share had been declining at an alarming rate, as financing became cheaper, preventing Oxford Square from refinancing at its previously higher rates. Additionally, the company has historically over-distributed dividends to shareholders, thereby eroding its NAV and future income generation due to reduced asset holdings.
Considering that the Fed has not cut interest rates due to the current economic uncertainty, we expect Oxford Square to generate stable investment income per share in the near term.
The 2020 dividend cut should enable Oxford Square to retain some cash, hopefully allowing it to start regrowing its NAV. With rates unlikely to continue moving any lower for the moment, income generation should stabilize.
With investment across a wide breadth of different industries, Oxford Square has a reasonably balanced portfolio. The company’s top three industries do make up most of the portfolio, but they are in different areas of the economy. This provides some protection in the event of a downturn in one industry.
However, if rates decline over time, the company’s receivables could be further pressured, potentially worsening its annual financial performance. Overall, we believe that the company’s future investment income generation carries substantial risks, while a potential recession and an adverse economic environment could severely damage its interest income.
Source: Investor Presentation
Competitive Advantages & Recession Performance
Oxford Square Capital benefits from a unique competitive position as a specialty lender, focusing on syndicated bank loans and CLO (collateralized loan obligation) investments, which provide high current income and diversification across various industries. Its expertise in managing CLO equity and debt tranches allows the company to capture attractive yields even in volatile credit markets.
OXSQ’s earnings per share during the Great Recession are below:
2007 earnings-per-share: $1.32
2008 earnings-per-share: $0.91
2009 earnings-per-share: $0.51
2010 earnings-per-share: $0.89
During recessions, however, OXSQ’s performance can be sensitive to credit spreads and loan defaults, as its income depends on borrowers’ ability to make payments. That said, its diversified portfolio, active credit monitoring, and conservative leverage strategy help cushion against downturns. The company’s consistent dividend policy and flexible investment structure position it to rebound strongly when credit markets stabilize, giving it an advantage over more narrowly focused lenders.
Dividend Analysis
Oxford Square only recently began paying a monthly dividend, with the first being distributed in April 2019. Total dividends paid over the past few years are listed below:
2015 dividends: $1.14
2016 dividends: $1.16 (1.8% increase)
2017 dividends: $0.80 (31% decline)
2018 dividends: $0.80 (no increase)
2019 dividends: $0.80 (no increase)
2020 dividends: $0.6120 (23.5% decline)
2021 dividends: $0.42 (31.4% decline)
2022 dividends: $0.42 (Flat)
2023 dividends: $0.54(28.5% increase)
2024 dividends: $0.42 (22% decline)
Shareholders received a small increase in 2016, followed by three large dividend reductions since 2017. This inconsistency in dividend payout is due to the company’s volatile financial performance. Last year’s dividend total was negatively impacted by the absence of a $0.12 per share special dividend that occurred in 2023. The monthly payment has remained the same since the 2020 cut.
Oxford Square currently pays a monthly dividend of $0.035 per share, equaling an annualized payout of $0.42 per share.
Based on a full-year payout of $0.42 per share, Oxford Square stock yields 21.8%. Although the dividend cuts in recent years have been substantial, the dividend yield remains remarkably high. That said, investors should not focus solely on yield; dividend safety is a crucial consideration for income investors, and in this regard, Oxford Square leaves a lot to be desired.
Based on our expectation of a full-year investment income per share of $0.32 for 2025, the company is projected to maintain a 100% dividend payout ratio for 2025. However, if investment income declines from current levels, another dividend cut could result.
Final Thoughts
Oxford Square boasts a robust business model, characterized by diversification across various investment assets and industries. The company has also taken steps to build up its less risky asset position while decreasing its reliance on riskier CLOs.
That said, Sure Dividend recommends that risk-averse investors avoid Oxford Square. We believe that the dividend does not offer enough safety. The company distributes essentially all of its investment income, leaving little room for maneuver. Any decline in investment income could lead to further dividend cuts, making Oxford Square a less attractive investment option for investors seeking stable and secure sources of income. Thus, we have a Sell recommendation.
If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:
High-Yield Individual Security Research
Other Sure Dividend Resources
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