GAIN Stock: Dividend, Supplementals and the SFEG Exit (2026)

What GAIN is, and why its dividend works differently

Gladstone Investment buys into lower middle market companies, generally those with $5 million to $25 million of EBITDA, alongside management or an independent sponsor, with a loan and an equity stake. The 10-K says it expects the portfolio “over time” to be about 70% debt and 30% equity at cost; at June 30, 2026 it was 70.6% and 29.4%. At fair value the weight is different: first and second lien debt were $667.4 million (52.3%) and preferred and common equity $609.7 million (47.7%) of the $1,277.1 million valued with Level 3 inputs (our arithmetic). That is the point of the model. Interest pays the monthly distribution; the equity is meant to produce the gains that pay the rest.

It is externally managed by Gladstone Management Corporation, and its affiliated funds Gladstone Capital and Gladstone Alternative have co-invested with it under an exemptive order (10-Q). The adviser is paid in three ways (10-Q): a base fee of 2.0% a year on average gross assets; an income fee that starts only when quarterly pre-incentive NII exceeds 1.75% of net assets, takes 100% of the next slice up to 2.1875%, then 20% above it; and a capital gains fee of 20% of realized gains less realized losses and unrealized depreciation, set at fiscal year-end. Two credits soften the base fee: the 2.0% loan servicing fee under the credit facility is credited back in full ($11.8 million in fiscal 2026), and another $5.4 million of credits in fiscal 2026 which the 10-Q calls “non-contractually, unconditionally, and irrevocably” given.

As of June 30, 2026 it held 29 portfolio companies with total investments at fair value of $1,282.0 million, 122.7% of cost, funded by $570.8 million of borrowings against net assets of $646.8 million (0.88 times, our arithmetic). Three of its four note issues trade on Nasdaq under their own tickers (GAINZ, GAINI and GAING), so the ticker GAIN refers to the common stock only.

The $0.08 a month, and the six supplementals

The monthly amount has been $0.08 in every month the 10-K tables show, April 2023 through September 2026 (declared). The 10-K says Gladstone has raised the monthly distribution by 100.0% since March 2011 and has declared and paid 24 supplemental distributions since inception. Here are the six since the start of fiscal 2024, each as the 10-K tables list them.

The cash column multiplies the per-share amount by the shares outstanding at the nearest quarter-end (35.35 million at December 31, 2023; 36.69 million at September 30, 2024; 37.35 million at June 30, 2025), so it is approximate. The match of payment to exit is ours, by date; the filings say the board sets supplementals “as appropriate” from its estimate of taxable income and net long-term capital gains, not that a given exit funded a given payment. By fiscal year the supplementals were $1.24 in fiscal 2024, $0.70 in 2025 and $0.54 in 2026, and total distributions per share were $2.20, $1.66 and $1.50, which was $76.1 million, $61.0 million and $57.2 million in cash.

The exits themselves, from the 10-K investment highlights:

In the three cases the supplemental was declared in the month of the exit (Counsel Press, October 24, 2023; Nth Degree, September 17, 2024) or the month after (Nocturne, April 8, 2025). The cash paid was about 72%, 61% and 102% of the realized gain on the equity (our arithmetic). That is not a rule; the amount is a board estimate of taxable income, which differs from the book gain. But the pattern is the one to watch if SFEG closes.

One caution on the count. The July 7, 2026 press release calls the SFEG sale “Gladstone Investment’s 31st realized exit from a management-supported buyout investment since inception”; the 10-Q, written a month later, counts 33 exits under the buyout strategy before SFEG. The two use different definitions and the filings do not reconcile them.

Adjusted NII against the regular distribution, eleven quarters

Gladstone reports GAAP NII and, beside it, adjusted NII, which is NII before the capital gains-based incentive fee. The table shows both per weighted-average share, the fee accrual that separates them, and the regular and supplemental distributions paid in the quarter. The last column divides adjusted NII by the $0.24 of regular distributions (our arithmetic, on rounded figures).

The December 2023 quarter paid $0.12 on November 17 and $0.88 on December 15 on top of the three monthly payments. Three things stand out.

Adjusted NII drifted down, then jumped. It was $0.23 to $0.26 in each of the eight quarters from December 2023 to September 2025, then $0.21 and $0.20, then $0.26. The two weak quarters came with a larger debt bill: interest expense rose from $28.2 million in fiscal 2025 to $37.1 million in fiscal 2026 (10-K), after new notes at 7.875% (December 2024), 6.875% (November 2025) and 7.125% (February 2026), while the weighted-average yield on interest-bearing investments fell from 13.9% to 13.3% as SOFR fell.

GAAP NII is not a usable coverage figure here. Two consecutive loss quarters (negative $0.16 and negative $0.27) coincided with NAV rising from $13.53 to $16.78. The release says the capital gains fee is accrued “where such amounts were not contractually due under the terms of the investment advisory agreement”. For fiscal 2026 the accrual was $38.0 million; GAAP NII was a loss of $3.8 million, or $0.10 per share, while adjusted NII was $0.88.

Three years almost cover the monthly amount. Adjusted NII totalled $2.85 over fiscal 2024 to 2026 against $2.88 of regular distributions (99%, our arithmetic). That leaves the supplementals ($2.48 over the three years) to come from realized gains; the 10-K says the exits, “in part,” enabled them. Gladstone also elected to treat $18.7 million, $36.7 million and $21.3 million of the first distributions after year-end as paid in fiscal 2024, 2025 and 2026 (10-K); estimated spillover was $22.5 million, $0.56 per share, at June 30, 2026.

How much of the regular distribution rests on one-off fee income

Roughly nine-tenths of Gladstone’s investment income in fiscal 2026 was interest. The rest is dividend income and success fees, which the company describes as income “the timing of which can be variable”. The 10-K explains that “Unlike PIK income, we generally do not recognize success fees as income until payment has been received”; contractual success fees not yet recognized were $63.8 million, or $1.60 per share, at June 30, 2026.

Take that income out of adjusted NII and the picture changes. This table is only for fiscal 2026 and the June 2026 quarter, because the income-based incentive fee was close to zero in those periods and does not offset the subtraction (about $0.3 million of the $38.3 million fiscal 2026 incentive fee, the rest capital gains, our arithmetic). It is a stress view, not a measure Gladstone reports, and dividends and success fees are a normal part of this model, not an accounting trick.

The June 2026 quarter shows it best: adjusted NII of $0.26 includes $5.6 million of success fee income, against $0.8 million in the same quarter a year earlier. Whether that is a weakness depends on what the reader assumes the equity will deliver. Gladstone’s argument is that interest plus periodic exits together support the payout; the filings give the tools to test it, not the answer.

SFEG: the exit in the filings

On July 7, 2026 Gladstone and Enerpac Tool Group each filed an 8-K. Gladstone said portfolio company SFEG Holdings “has agreed to the sale of Specialized Fabrication Equipment Group LLC” to Enerpac, “marking another successful realization for Gladstone Investment’s buyout strategy”, and that it expects “full repayment of its debt investment” and “a significant capital gain on its equity interest”. Enerpac’s release puts the price at “approximately $472 million in cash”, 10.6 times trailing-twelve-month adjusted EBITDA, for a business with about $170 million of sales and about $44 million of adjusted EBITDA. Gladstone’s 10-Q says closing is expected in the third or fourth quarter of the calendar year.

SFEG was 10.1% of the portfolio at March 31, 2024 and 10.8% at March 31, 2025 (10-Ks). Five points from the numbers, none of them a forecast:

• The gain is already in NAV. The common stock is carried at $136.6 million above its cost (our arithmetic), $3.43 per share. In our reading, a sale at the carrying value would turn unrealized into realized gain and add cash without changing NAV at that moment, because NAV already includes the gain, net of the accrued fee. The common was marked down $36.7 million (our arithmetic), about $0.92 per share, in the quarter ended June 30, before the July 7 announcement; the filings do not say why.
• The adviser’s fee is next in line. The $71.7 million accrued is a GAAP liability, not a bill; the contractual fee is calculated at fiscal year-end (March 31, 2027) on cumulative realized gains less realized losses and unrealized depreciation. It is 20% of that net figure, less fees paid in earlier years, so it is not 20% of the SFEG gain.
• Cash does not equal a supplemental. Gladstone invested $56.5 million in a new company, DHE Computer Systems, in July 2026 and agreed in June to acquire Extrude Hone; it had $157.6 million drawn on the credit facility at June 30. The 10-K says it may keep long-term gains and treat them as deemed distributions instead of paying them in cash. Nothing in the filings says a supplemental is planned.
• Book gain is not taxable gain. The tax basis, escrows and closing adjustments are not in the filings. The board sets supplementals from estimated taxable income.
• The closing is not confirmed. Enerpac’s 8-K filed October 15 refers to its “previously announced agreement” and says the awards tied to it “will be forfeited for no consideration if the SFE Group acquisition does not close on or before November 30, 2026”. Enerpac filed no completion report as of October 16, 2026. Gladstone’s own timing (calendar third or fourth quarter) is consistent with that window.

If it closes in October through December, the second-quarter 10-Q (September 30) will list it only as a subsequent event; the first filing to show the realized gain and any supplemental would be the 10-Q for the quarter ended December 31, 2026, due around early February 2027 (the last two were filed on February 3, 2026 and February 12, 2025), though an 8-K or press release may come sooner.

NAV path: where the $3.79 came from, and where the price sat

NAV per share was $12.99 at June 30, 2025 and $16.78 at March 31, 2026. The fiscal 2026 gain came from $216.1 million of unrealized appreciation: $222.1 million on equity and $6.0 million of depreciation on debt, with the J.R. Hobbs restructuring reversing $19.1 million of earlier depreciation. Net unrealized appreciation was $70.2 million in the December quarter and $92.8 million in the March quarter (the March release states $92.5 million on investments, $2.32 per share). The 10-K attributes the rise to better results at some portfolio companies and higher transaction multiples used in valuations. The same filing shows what happened to the traded price in those quarters, next to the quarter-end NAV, using the 10-K’s own high and low intraday prices:

The footnote warns that these premiums and discounts compare a price in the quarter with NAV at the quarter’s end, so they may not match the premium on any given day. The pattern is still clear: prices stayed between $11.42 and $15.34 across all eight quarters while NAV climbed, and the quarterly highs went from an 18% premium to a 13% discount. For April 1 to May 11, 2026 the 10-K gives a high of $17.14 and a low of $13.99, with the quarter’s NAV not yet struck. There is no current price on this page, and none of this says what the shares are worth.

Equity issuance follows from the same arithmetic. In fiscal 2026 Gladstone sold 2,984,586 shares through its at-the-market program at a weighted-average $14.12, raising about $41.5 million, and the release says every sale was above the then-current NAV. Shares outstanding have been 39,821,967 since December 31, 2025, and the program had $30.8 million of capacity left at June 30, 2026. At the annual meeting adjourned from August 6 for lack of a quorum and reconvened September 4, stockholders approved authority to sell up to 25% of the shares at a price below NAV: 14,460,192 for, 4,733,646 against, 1,075,897 abstaining. The company’s own proxy letter said it has “no immediate plans to issue any shares of common stock below NAV”.

Credit: three non-accruals, and a pattern of restructuring loans while the equity rises

Non-accrual loans, the ones on which Gladstone has stopped recognizing interest, fell from $90.3 million at cost in June 2025 to $40.3 million after J.R. Hobbs was restructured in September 2025, and have not changed since.

Realized losses sit beside the equity gains. In September 2025 Gladstone swapped J.R. Hobbs loans with a cost basis of $49.9 million for a new $20.0 million first lien term loan and booked a $29.9 million realized loss, while reversing $19.1 million of previously recorded unrealized depreciation. In June 2026 a $12.0 million first lien loan to Home Concepts Acquisition, made in May 2023, became a new $3.0 million loan, with a $9.0 million realized loss. In March 2024 it recognized a $14.7 million realized loss on The Mountain Corporation. For fiscal 2026 net realized losses on investments were $26.3 million while unrealized appreciation was $216.1 million. The two numbers measure different things: a realized loss is final, while unrealized appreciation depends on the next sale price.

The loan book itself is plain: at June 30, 2026 the weighted-average interest rate on debt investments was 12.9% (excluding non-accruals), 51.8% of debt investments were at their rate floor, 100% had floors and variable rates, and the release says none had a paid-in-kind component. A reader comparing with other BDCs on PIK income and non-accruals will find GAIN has none of the first and 1.8% of debt at fair value in the second.

Debt: what comes due and what the facility costs

The 5.00% Notes due 2026 ($127.9 million) were repaid at maturity on May 1, 2026, and the facility was amended in June to raise the commitment from $300.0 million to $405.0 million, extend maturity to June 8, 2031 and cut the spread from SOFR + 3.25% (December 2025) to SOFR + 2.85%. Fixed-rate borrowings were 72.8% of the total. Nothing in the table matures before November 2028. The cost is visible in the Q1 income statement: interest expense was $9.9 million in the June 2026 quarter against $8.5 million a year earlier. Asset coverage was 208.8% at June 30, 2026, 213.8% at March 31, 189.8% in June 2025 and 219.0% in March 2024, against a 150% minimum.

What changed in the latest filings

• Management: on October 1, 2026 Erika Highland became President, and David Dullum, who had been CEO and President, continues as CEO (8-K, October 1).
• New buyouts: four new portfolio companies in fiscal 2026 (Smart Chemical, Sun State, Global GRAB and Rowan Energy), then $56.5 million in DHE Computer Systems in July 2026 ($40.3 million first lien and $16.1 million preferred) and a pending Extrude Hone acquisition that the release expected to close in July to September.
• Distributions: $0.08 for each month through September 2026, declared in July. In the last three years the board declared the October-to-December monthly amounts on October 10, 2023, October 8, 2024 and October 14, 2025. We found no SEC filing for an October 2026 declaration as of October 16.
• Meeting: adjourned on August 6, 2026 for lack of a quorum, reconvened on September 4 (8-Ks).

What a holder or reader can do with this

This is a checklist built from the filings, not a recommendation.

• Pick the dividend you are measuring. Against the $0.24 a quarter, adjusted NII was 83% to 108% in the last eleven quarters, and 49% to 79% if dividend and success fee income is set aside for the last five.
• Read the SFEG closing before you read a supplemental. Check Enerpac’s filings for a completion report; Gladstone’s next declaration (usually the second week of January) and its 10-Q for the quarter ended December 31, 2026 are the first places a realized gain can show.
• Use adjusted NII, not GAAP NII, and know why. The gap is the capital gains fee accrual: $71.7 million at June 30, 2026, $0.37 to $0.47 a share in the two quarters that made GAAP NII negative.
• Expect the next 10-Q in early November. Fiscal quarters end June, September, December and March; the 10-Q for the quarter ended September 30, 2026 has been filed between November 1 and November 7 in each of 2023, 2024 and 2025. Items to look for: SFEG’s mark, success fees, the Extrude Hone closing, non-accruals against $40.3 million, and any use of the below-NAV authority.
• Plan for the tax form. Gladstone reported that 51.3% of calendar 2025 distributions were ordinary income and 48.7% capital gains (2024: 52.9% and 47.1%); the final split is on Form 1099-DIV (timeline).
• Compare structure, not only yield. For a listed BDC with an internal manager and its own supplementals, see our page on Main Street Capital; for the whole group, our listed BDC list and non-traded BDC list; for the basics, what a BDC is.

FAQ

All figures are from SEC filings read on EDGAR on October 16, 2026. Gladstone Investment Corporation (CIK 1321741): the Forms 10-K for the fiscal years ended March 31, 2024, 2025 and 2026 (accessions 0001321741-24-000009, 0001321741-25-000010 and 0001321741-26-000011); the Forms 10-Q for June 30, 2025, September 30, 2025, December 31, 2025 and June 30, 2026 (0001321741-25-000018, -25-000022, -26-000005 and -26-000017); the earnings releases (Exhibit 99.1) for the quarters ended March 2024 through June 2026 (0001321741-24-000010, -24-000014, -24-000018, -25-000006, -25-000012, -25-000019, -25-000023, -26-000006, -26-000012 and -26-000018); the 8-Ks of July 7, 2026 (0001193125-26-297752), August 6, 2026 (0001193125-26-338057), September 4, 2026 (0001193125-26-383646) and October 1, 2026 (0001193125-26-410647); and the proxy materials of July 14, 2026 (0001193125-26-302640). Enerpac Tool Group Corp. (CIK 6955): the 8-K Exhibit 99.1 of July 7, 2026 (0001140361-26-027991) and the 8-K of October 13, 2026 (0000006955-26-000065). Percentages of one figure against another, three-year sums, the cash value of supplementals, the adjusted-NII-without-fee-income table, SFEG totals and per-share figures, and the weighted note rate are our arithmetic. Adjusted NII is the company’s non-GAAP measure. This is analysis of public documents, not investment, legal or tax advice.