Sixth Street Specialty Lending (TSLX) Q3 2026: Dividend Cut and Rising Leverage
As seen on the 24/7 Wall St. homepage on November 3, 2026.
Income investors face a smaller check: the base payout is now $0.42, down from $0.46 a year ago, as falling reference rates pulled net investment income lower. The quarter was in line with estimates, but NAV per share slipped again and leverage climbed to 1.25x.
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Sixth Street Specialty Lending posted adjusted earnings per share of $0.44 for the third quarter of 2026, in line with estimates, while revenue of $98.96 million came in above expectations of $97.90 million. Income-focused investors should look underneath that narrow beat, where the numbers tell a more cautious story.
Total investment income slipped to $99.0 million from $109.4 million a year earlier, as lower reference rates compressed the floating-rate returns that business development companies depend on. Net investment income followed suit, falling to $41.6 million from $50.68 million in the year-ago period. That pressure on income is the direct reason the board trimmed the quarterly base dividend to $0.42 from $0.46 a year ago, a cut of roughly 9%. A supplemental dividend of $0.01 per share was also declared for the third quarter.
NAV per share declined again, settling at $16.19 compared with $16.24 at the end of the prior quarter and $17.14 a year earlier. At the same time, leverage rose to 1.25x debt-to-equity from 1.15x a year ago, a combination that narrows the cushion available to absorb further credit deterioration. Non-accrual investments stood at 1.8% of the portfolio at cost, a slight improvement from 1.9% the quarter before.
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On the more encouraging side, new investment commitments surged to $241.7 million from $114.6 million in the prior quarter, driven by gross originations of $1,195.9 million. The weighted average yield on debt and income-producing securities at fair value also nudged up to 11.4% from 11.1% at June 30, 2026, suggesting the new deployment is being put to work at competitive rates even as spreads on new commitments tightened to 6.0% from 6.6% a year ago.
Looking ahead, management offered no quantitative financial guidance. CEO Bo Stanley described the firm's strategy as bringing a differentiated perspective to where and how it invests capital, positioning the company to navigate what he called an increasingly bifurcated credit market. The fourth-quarter base dividend of $0.42 per share is set to pay on December 31, 2026, to shareholders of record as of December 15, 2026.
Mentioned: TSLX