Blue Owl Capital's 10% Yield: Finally A Buy (Rating Upgrade)

Core Viewpoint - Blue Owl Capital Corporation is a well-managed business development company with a focus on First Lien investments, offering a high-quality 10% dividend yield and currently trading at a 7% discount to net asset value, making it an attractive option for passive income investors [1][13]. Investment Portfolio - Blue Owl Capital's investment portfolio is primarily focused on First Lien investments, which accounted for 75% of its investments as of June 30, 2024, with an additional 6% in Second Liens [3][5]. - The company has a significant reliance on floating-rate loans, with 97% of its debt investments being floating-rate [3]. Financial Performance - In Q2 2024, Blue Owl Capital generated $396.8 million in total investment income, reflecting a 0.6% year-over-year increase, with interest from investments being the primary income source [7]. - The company produced net investment income of $189.1 million in Q2 2024, up 1.3% year-over-year, while operating expenses remained flat at $205.2 million [8]. - The dividend pay-out ratio for Q2 2024 was 77%, with a supplemental dividend of $0.06 per share, raising the total pay-out ratio to 90% [10]. Market Position - Blue Owl Capital's stock classification was modified from 'Sell' to 'Buy' due to its recent price decline and current availability at a discount to book value, which is seen as an opportunity for passive income investors [2][15]. - The company is now considered a more compelling investment due to its solid dividend coverage and the recent drop in valuation, which has affected other major business development companies as well [13][15].