TSLX Stock: Base Dividend Cut to $0.42, NII, NAV, Non-Accruals

What TSLX is, and what its filings add to a quote page

TSLX is a listed business development company, a BDC, externally managed by Sixth Street Specialty Lending Advisers, LLC, an affiliate of Sixth Street, which describes itself as having over $135 billion in assets under management and committed capital. The 10-K says it focuses on companies with enterprise value between $50 million and $1 billion. At June 30, 2026 it held 137 portfolio companies with a fair value of $3,302.1 million, an average of $30.9 million each, and net assets of $1,548.6 million on 95,343,139 shares.

A quote page gives price and yield. The filings give what a quote page does not: whether NII covers each dividend, the formula the adviser is paid under, the three borrowers that have stopped paying, and how the 10-Q's internal ratings have drifted. TSLX is also one of the 25 listed BDCs in our census of 36 BDCs' non-accruals and PIK and our list of BDC stocks; if you are new to the structure, see what a BDC is.

The base dividend: cut from $0.46 to $0.42, and the supplemental gone

TSLX's dividend framework, per the 10-K, “provides for a quarterly base dividend and a variable supplemental dividend, subject to satisfaction of certain measurement tests and the approval of the Board.” The filings do not give the tests. The table uses the quarterly earnings releases (accessions in the CSV) and the dividend tables in the 10-K and the June 2026 10-Q. The base column is what was paid in that calendar quarter; the supplemental column is the amount declared with that quarter's earnings and paid the next quarter. Cover ratios divide NII per share by the base dividend paid in the same quarter (our arithmetic).

Adjusted NII is the company's non-GAAP measure: NII before the accrual or reversal of the capital gains incentive fee on unrealized gains. In Q1 and Q2 2026 the two are identical because no such fee was accrued.

Three things stand out. First, the cut came one quarter after cover went under 100%. The February 12, 2026 release declared $0.46 for the first quarter; the Q1 results of May 5 showed NII of $0.42 and declared $0.42 for the second quarter. The release says: “The decision to revise the base dividend level was informed by what the Company believes is a responsible and sustainable dividend policy.” Second, cover is thin at the new level: $0.43 against $0.42 in Q2, and the Q2 release states “There was no supplemental dividend related to Q2 earnings.” Third, the base dividend is now 8.7% lower while NII per share is 30.6% lower than the $0.62 of Q4 2024 (our arithmetic), so the cut tracks earnings.

The supplemental was the shock absorber. In each quarter from Q4 2023 to Q3 2025 it was 43% to 50% of the amount by which adjusted NII exceeded the base dividend (our arithmetic; the company does not state a fraction in its filings). In Q4 2025 adjusted NII exceeded base by $0.06 and the supplemental was $0.01, 17%. The release of August 4, 2026 says the supplemental dividend policy “remains in place to distribute over-earning to shareholders based on the existing framework,” which at $0.43 against $0.42 leaves nothing to distribute.

The twelve-month NII of $1.92 is the sum of $0.54, $0.53, $0.42 and $0.43 (our arithmetic) and equals 101.6% of the $1.89 declared. Six-month 2026 dividends declared were $0.89 against NII of $0.85 per share (10-Q financial highlights, weighted average shares), 105% (our arithmetic). The 10-Q says these dividends were “derived from net investment income, determined on a tax basis.” At the June 30 share price of $17.17 the $1.68 base run-rate is a 9.8% yield, and on NAV of $16.24 it is 10.3% (our arithmetic). Neither is a forecast.

ROE: why 14.7% became 10.6%

TSLX reports an annualized return on equity on NII, calculated on the prior quarter-end NAV per share. It is a plain read of how much each dollar of shareholders' equity earned before gains and losses.

From Q4 2024 to Q2 2026 total investment income fell from $123.7 million to $97.8 million, 20.9% (our arithmetic), even though debt-to-equity ended higher at 1.27x. The 10-Q gives the reason for the year-on-year drop: “The decrease in investment income was primarily the result of a decrease in reference rates for the three months ended June 30, 2026 compared to the same period in 2025.” Interest from non-controlled, non-affiliated investments was $83.1 million in Q2 2026 against $98.7 million a year earlier. Other income, which carries fees on new deals and prepayments, was $4.0 million against $7.6 million.

Costs fell less than income. Interest expense was $30.1 million and the average interest rate on debt 5.6%, against 6.3% a year earlier; net expenses were $55.7 million against $62.9 million. NII was $40.9 million against $50.8 million (our reading of the release's statement of operations). For the six months, NII was 10.31% of average net assets against 13.53% in 2025 (10-Q financial highlights). The full-year ROE on NII was 13.1% for 2025, so the 2026 figures are a step down, not a continuation.

PIK income rose. Paid-in-kind interest was $6.7 million in Q2 2026 against $5.8 million, 6.9% of investment income against 5.0%, and $13.7 million for six months against $11.1 million, 7.2% against 4.8% (our arithmetic). The 10-Q attributes it to “increased PIK investments.” Our census of 36 BDCs shows the same six-month figure against other lenders.

NAV per share and the share price

NAV per share was stable near $17 for eight quarters, between $17.04 and $17.19 from Q4 2023 to Q3 2025, and then fell to $16.24. That is below every year-end figure from 2018 to 2025 in the 10-K's ten-year table; the lowest of those was $16.25 at the end of 2018 (our reading of the table).

What moved it: the Q1 2026 release attributes $0.58 per share of the decline to movement in fair value from market inputs; that “included $0.40 per share from unrealized losses in the debt portfolio tied to credit spread widening” and $0.18 from lower valuations in the equity portfolio. Q1 net income was a loss of $0.27 per share (ROE on net income of -6.5%). In Q2 the release says NAV per share “was unchanged this quarter, as net investment income of $0.43 per share was substantially offset by the second quarter base dividend of $0.42 per share,” with $0.04 of unrealized losses on credit spreads, $0.06 of gains on equity market multiples and $0.01 of realized gains.

The six-month bridge in the 10-Q's financial highlights, per share: $16.98 at December 31, 2025, plus $0.85 of NII, minus $0.70 of realized and unrealized losses, minus $0.89 of dividends declared, equals $16.24 (the decrease is $0.74). Total return on NAV for the six months was 0.88%; total return on market value was -16.85%.

The price has done what NAV has not. From June 30, 2025 to June 30, 2026 the price fell 27.9% while NAV fell 5.4% (our arithmetic). TSLX has a repurchase program of up to $50 million at certain thresholds below NAV; in the first half of 2026 it bought 30,938 shares at a weighted average $16.17, a cost of $0.5 million. The 10-Q gives no price after June 30; check a quote for today's premium or discount.

Non-accruals, internal ratings and the three names

Loans are generally placed on non-accrual when payments are 30 days or more past due or when management has reasonable doubt they will be paid in full. The release series below is the share of the portfolio at fair value.

At fair value the share jumped in Q1 2026 from 0.6% to 1.4%. At amortized cost the picture is steadier and higher: $63.6 million, 1.9%, at June 30, 2026, against $68.8 million, 2.1%, at December 31, 2025, because the loans are marked below cost: $42.7 million at fair value in June against $20.0 million in December (10-Q). The Q1 release says there was “one addition and one removal from non-accrual status during the quarter, resulting in no change to the total number of investments on non-accrual at three names,” and the Q2 release that “There were no new portfolio companies added to non-accrual status during the quarter.”

The June 30, 2026 schedule of investments flags these three borrowers as non-accrual (fair value of the lines we list; each borrower has small further lines):

These lines add to $42.5 million of the $42.7 million non-accrual total (our arithmetic). Bed Bath and Beyond is on the June list but not the December one (our reading of the two schedules); two of its loans are labeled DIP term loans, acquired April 2023, and the ABL FILO term loan was acquired in September 2022. The 10-Q also records a $17.0 million separate make-whole claim on it: “Given uncertainty relating to collectability of the Make-Whole, the Company has applied a full valuation allowance against the amount of the Make-Whole balance outstanding.” At December 31, 2025 the three names were Astra Acquisition Corp. (a $40.1 million par second-lien loan, marked at zero, cost $39.5 million), ASP Unifrax and American Achievement. The 10-Q reports net realized losses on investments of $38.5 million for the first six months of 2026 ($39.3 million in Q1) without tying them to a named loan, so we do not either.

The adviser also grades every investment 1 to 5 each quarter. A 1 means performing as agreed with no concerns; a 5 means default, which “would typically indicate the position has been placed on non-accrual status.” The distribution, at fair value:

Ratings 2, 3 and 5 together were 4.9% of fair value in December 2024, 10.3% in December 2025 and 13.8% in June 2026 (our arithmetic), and $455.2 million in June (349.3 plus 63.2 plus 42.7). The 10-Q cautions that risk assessment is not standardized across the industry, so the scale is not comparable with another BDC's.

How the adviser is paid: management fee and incentive fee

The terms are in Note 3 of the 10-Q and are the same as in the 10-K. They matter because they set how much of each dollar of income goes to the adviser before shareholders see it.

The hurdle is measured on net assets: 1.5% a quarter is 6% a year (our arithmetic). Because the catch-up is 100%, once pre-incentive NII passes 1.82% of net assets in a quarter the adviser takes 17.5% of all of it, not only the excess. The 10-Q is explicit that the base includes income not received in cash: pre-incentive fee NII “includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay-in-kind interest and zero coupon securities), accrued income that the Company may not have received in cash.” In Note 3 we found no total-return or loss-carryforward test on the income fee. The fee agreement is renewed annually: the board renewed it in November 2025 for a term to November 2026, terminable by either party on 60 days' notice.

In Q2 2026 the net management fee of $12.5 million plus the $8.7 million incentive fee equal $21.2 million, 21.7% of the $97.8 million of investment income (our arithmetic). For how a larger lender's formula compares, see our ARCC page and OBDC page.

Portfolio mix: first lien still dominates, but less than it did

At June 30, 2026 the portfolio at fair value was 88.3% first-lien debt, 0.7% second-lien, 2.0% mezzanine, 4.7% equity, 2.7% structured credit and 1.6% in a joint venture; 96.1% of debt investments bore floating rates and all of those had rate floors. First-lien share has stepped down:

First lien fell 5.6 points from December 2024 to June 2026 (our arithmetic). Equity, structured credit and the joint venture together are 9.0% of fair value (4.7 plus 2.7 plus 1.6, our arithmetic). The joint venture is Structured Credit Partners JV, LLC (SCP), formed December 23, 2025 with affiliates of Carlyle to invest in broadly syndicated first-lien loans financed with CLO debt, “on a no-fee basis.” SCP has $600.0 million of commitments: $200.0 million from TSLX, $100.0 million from Sixth Street Lending Partners, $150.0 million from Carlyle Secured Lending and $150.0 million from Carlyle Credit Solutions. TSLX had contributed $51.4 million and had $148.6 million unfunded, and SCP held 428 companies with a weighted average yield of 6.77% at fair value. The 10-Q puts the daily weighted average yield on TSLX's own investment in SCP at 18.7%, and TSLX recognized $1.9 million of dividend income from it in six months. That is the link to the non-traded side: Sixth Street Lending Partners, which our non-traded BDC list covers, is a member of the same vehicle.

By industry (the company's own categories) the largest groups are:

The 10-Q has no separate software line, so we do not state a software percentage. The six largest single lines on the schedule, as a share of net assets, are:

These are single first-lien lines; a borrower can hold further lines, so they are floors, not company totals. Together they are $429.7 million, 27.8% of net assets (our arithmetic). Two are due before the end of 2028, ExtraHop in July 2027 and EDB Parent in July 2028.

Origination activity is slow and mostly passed on. In Q2 2026 gross originations were $821.3 million, including affiliates of Sixth Street, of which $706.7 million (86.0%, our arithmetic) was syndicated or sold down, leaving $114.6 million of new commitments against $338.1 million in Q1. TSLX funded $136.7 million and received $192.1 million of exits and repayments. New commitments carried a weighted average interest rate of 10.4% against 10.7% on investments fully sold or paid down.

Debt, liquidity and maturities

At June 30, 2026 TSLX had $1,966.0 million of debt principal (carrying value $1,925.0 million), $193.6 million of cash and cash equivalents (including restricted cash), and $1,086.2 million of undrawn revolver, subject to borrowing base and other limits. The 10-Q gives an asset coverage ratio of 179.1%, down from 191.5% at December 31, 2025 and 184.7% at March 31, 2026, against the 150% legal minimum. Debt to equity was 1.27x at quarter end. Funding was about 79% unsecured and 21% secured; the weighted average remaining maturity of debt was about 3.8 years against about 2.4 years for the investments it funds.

Two points. First, the nearest unsecured maturity is now August 2028 ($300 million at 6.95%); the 2031 notes, per the May 14, 2026 8-K, are unsecured with proceeds meant to pay down the revolver. Second, the 10-Q states TSLX was in compliance with its debt arrangements at June 30, 2026 and lists the revolver's financial covenants, which include stockholders' equity of at least $650 million plus 25% of net proceeds of equity sold after April 24, 2024 (net assets were $1,548.6 million). The 10-Q also lists a minimum asset coverage ratio covenant of 2 to 1 for the revolver, a different measure from the 179.1% reported under the 1940 Act; we did not reconcile the two definitions and the filing states compliance. Unfunded commitments to portfolio companies were $432 million, of which $221 million was available to borrowers.

What else changed in 2026

The company reported Q3 2025 on November 4, 2025; results for the quarter ended September 30, 2026 had not been filed as of October 15, 2026.

How TSLX compares with the other listed BDCs we cover, and with non-traded funds

The table puts TSLX next to three listed BDCs we have profiled, using each company's own second-quarter 2026 earnings release. The cover column divides second-quarter NII per share by the regular dividend declared for the third quarter of 2026 (our arithmetic); the companies define their measures differently, so read it as a rough ruler, not a ranking.

On these figures TSLX has the lowest non-accrual share at cost of the four (1.9%) and the second lowest at fair value (1.3%, after OBDC's 0.8%), and its cover of 102% sits between FSK's 100% and ARCC's 104%. ARCC's release shows $0.48 declared and payable in both Q2 2026 and Q2 2025; for the dividend histories of the others see their full pages: ARCC, OBDC, FSK and BXSL.

Against a non-traded BDC the structural difference is what you can sell and at what price. TSLX shares trade every day, and between June 30, 2025 and June 30, 2026 the price lost 27.9% while NAV lost 5.4%; a non-traded fund shows stress through NAV marks and tender proration instead (see our list of non-traded BDCs, which includes Sixth Street Lending Partners). If you hold one of Sixth Street's non-traded vehicles as well as TSLX, the Structured Credit Partners JV above is a holding they share.

What a holder or reader can do with this

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

• Watch cover, not only yield. NII per share was $0.43 against a $0.42 base in Q2 2026. A move of one or two cents either way changes whether the board has room for a supplemental, and the Q3 2026 release will show it.
• Read the ratings table next to non-accruals. Non-accruals are 1.3% of fair value, but ratings 2, 3 and 5 are 13.8% against 4.9% in December 2024. Ratings are a leading signal and non-accruals a lagging one.
• Know what pays the adviser. Income above a 1.5% quarterly hurdle is shared 17.5% to the adviser with a full catch-up, and PIK income counts. A lower base dividend does not change the formula.
• Check the premium. The price was 5.7% above NAV on June 30. The 10-Q gives no later price, so compare today's quote with the $16.24 NAV yourself.
• Mind the dates. Results for the quarter ended September 30, 2026 had not been filed as of October 15; the next filings will update every table here. Dividend income from a BDC is reported on your own Form 1099-DIV; see our 1099-DIV timeline.

If a large part of your savings or income sits in one BDC, a conversation with a qualified adviser about how it fits the rest of your holdings may be worth having.

FAQ

All figures are from Sixth Street Specialty Lending, Inc.'s SEC filings (CIK 1508655) read on EDGAR on October 15, 2026: the earnings releases (Exhibit 99.1 to the 8-Ks) for Q4 2023 through Q2 2026 (accessions 0000950170-24-015849, 0000950170-24-051245, 0000950170-24-088547, 0000950170-24-121446, 0000950170-25-019865, 0000950170-25-061026, 0000950170-25-100212, 0001193125-25-264683, 0001193125-26-048683, 0001193125-26-206354 and 0001193125-26-332772); the Forms 10-Q for March and June 2026 (accessions 0001193125-26-206313 and 0001193125-26-332725); the Form 10-K for 2025 (accession 0001193125-26-048664); and the 8-Ks of February 23, May 14 and May 5, 2026 (accessions 0001193125-26-063983, 0001193125-26-224000 and 0001193125-26-206354). Peer figures are from the Q2 2026 earnings releases of Ares Capital (accession 0001628280-26-050303), Blue Owl Capital Corporation (0001655888-26-000055) and FS KKR Capital (0001104659-26-091572). Ratios, sums across quarters, premiums to NAV and shares of totals are our arithmetic. Adjusted NII is the company's non-GAAP measure. This is analysis of public documents, not investment, legal or tax advice.