Blue Owl Capital: A Play on America’s Future
If you are optimistic about America’s economic future, then you can’t ignore the driving force behind it: private small- and mid-sized businesses.
You see, these businesses are the real powerhouse of the U.S. economy. These companies aren’t flashy, but they do employ millions of people and generate billions of dollars in revenue. They provide contracting services, build software, and are involved in transportation, medical supplies, etc.—you know, the kind of businesses that make the economy tick.
Now here’s the problem: a lot of these small- and medium-sized businesses aren’t traded on the stock market. So, how does one get exposure to them as an investor?
Enter business development companies (BDCs). And there’s one BDC that’s really worth looking into for robust income: Blue Owl Capital Corp (NYSE:OBDC).
OBDC stock has a double-digit dividend yield. The BDC, which lends to hundreds of middle-market U.S. businesses, could potentially be one of the smartest ways to bet on America’s powerhouse.
What Does Blue Owl Capital Corp Do?
Blue Owl Capital is a business development company (BDC) that provides direct lending and fund-of-fund investments to U.S.-based middle and upper-middle market companies. It primarily invests in senior secured, mezzanine, and unsecured loans, along with equity-related securities like warrants and preferred stock.
At Income Investors, we call BDCs “Alternative Banks.”
The BDC lends to businesses with $10.0–$250.0 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) or $50.0 million–$2.5 billion in annual revenue, making investments between $20.0 million and $250.0 million, typically with maturities of three to 10 years. (Source: “Profile,” Yahoo! Finance, last accessed May 27, 2025.)
As of March 31, 2025, Blue Owl Capital has a portfolio size of $17.7 billion, with 236 portfolio companies. Eighty-two percent of the portfolio consists of senior secured investments, and 97% of all investments have a floating rate. (Source: “Our portfolio at a glance,” Blue Owl Capital Corp, last accessed May 27, 2025.)
As a little background, in early 2025, OBDC merged with Blue Owl Capital Corporation III (OBDE), instantly making it the second largest externally managed BDC in the U.S. Its total assets jumped to over $18.0 billion.
Is OBDC Stock Inflation-Proof?
Here’s something to keep in mind when looking at OBDC stock: one could call it inflation-proof.
How so?
Well. 97% of Blue Owl Capital’s debt investments are floating rate. In simple terms, it means that, when interest rates go up, income at the company goes up.
Do you remember the sell-off in the tech sector back in 2022 and 2023?
While higher inflation and higher rates were spooking investors away from tech stocks, Blue Owl Capital was increasing its net investment income (NII), quarter after quarter.
To say the least, this Alternative Bank didn’t just survive the Fed’s tightening cycle; it has been thriving in it.
Now the financial world is getting ready for “higher for longer,” which could be a tailwind for Blue Owl Capital.
On the flip side, if the Federal Reserve starts cutting rates, say due to a slowing U.S. economy or some shock in the financial world, don’t forget that well over 80% of loans given by this BDC are senior secured. Essentially, if something goes wrong, Blue Owl Capital is hedged by collateral.
A Generous Dividend with Blue Owl Capital
As of this writing, OBDC stock has a dividend yield of about 10.9%. This BDC pays a base dividend of $0.37 per share per quarter, with a supplemental dividend that changes based on net investment income. In the most recent quarter, Blue Owl Capital’s declared supplemental dividend was $0.01 per share, for a total dividend of $0.38.
In the first quarter of 2025, its total dividend was $0.42 per share.
If Blue Owl Capital’s dividend were even just $0.38 for the last two quarters of 2025, this would mean total dividends of $1.56 per share.
This is a rock-solid dividend.
And here’s the kicker: OBDC’s dividend is fully covered by the company’s net investment income (NII). In the first quarter of 2025, Blue Owl Capital reported net NII of $0.41 per share, more than enough to fund the regular and supplemental payouts.
Chart Courtesy of StockCharts.com
The Lowdown on OBDC Stock
With a well-covered 10.9% dividend yield, a diversified portfolio focused on the engine of the U.S. economy, and a shareholder-friendly structure, OBDC stock stands out.
This Alternative Bank is thriving and giving average investors a chance to invest in companies that are out of their reach—i.e. not public.
Blue Owl Capital is also loved by institutional investors—close to 48% of all outstanding shares of OBDC stock are owned by institutional investors. The State of New Jersey Common Pension Fund, California State Teachers Retirement System, and Oregon Public Employees Retirement Fund are three of the biggest investors. Combined, they own 55.3 million shares. (Source: “Holders,” Yahoo! Finance, last accessed May 27, 2025.)