SPMC Stock: A Massive 16.7% Yield Paid Every Month
August 26, 2025
Interest Rates About to Drop? SPMC Stock Worth Watching
Today, I’m putting SPMC stock in the spotlight.
When interest rates start to turn, something interesting happens. Investors who’ve been sitting on the sidelines suddenly wake up and start hunting for yield again.
That could be the case today. Inflation has cooled, central banks are beginning to soften their tone, and there’s even talk of interest-rate cuts on the horizon. If that happens, it could spark a rush into income-generating investments.
And one company that could be a big winner in this environment is Sound Point Meridian Capital Inc (NYSE:SPMC).
SPMC stock doesn’t just offer an eye-catching dividend yield; it pays monthly.
What Does Sound Point Meridian Capital Do?
Sound Point Meridian Capital is an income-focused investment company that’s structured as a closed-end fund (CEF). Its primary goal is to generate high current income for shareholders, while offering some potential for capital appreciation over time.
The fund invests in the equity and mezzanine tranches of collateralized loan obligations (CLOs) backed by U.S. senior secured loans.
To put it in simple terms, think of CLOs as pools of corporate loans, packaged and sold in different layers of risk and return. The equity and mezzanine tranches typically carry higher yields, which is how Sound Point Meridian can offer robust dividends.
In addition, the company sometimes invests in loan accumulation facilities.
What is a loan accumulation facility?
Think of it as a storage box for loans. Before a group of loans gets bundled and sold to investors (in the form of a CLO), they sit in this box for a short time. This helps the company collect enough loans to create one big investment package later. (Source: “Overview,” Sound Point Meridian Capital Inc, last accessed August 18, 2025.)
Interest Rates & SPMC Stock
Over the past two years, higher rates have put pressure on income-generating assets across the board. Have you looked at real estate investment trusts (REITs) or business development companies (BDCs) recently? There’s widespread damage there.
But if we are at, or near, the peak in rates, and cuts begin in the coming quarters, the pressures could ease.
For SPMC stock, lower interest rates could do two things:
- As investors go hunting for yields, SPMC stock could show up on their radar. This would be nothing but good news for those who own it.
- Lower interest rates support the CLO market. Lower borrowing costs can improve the performance of underlying loans, ultimately strengthening CLO cash flows.
Put simply, the timing could be ideal for income investors with SPMC stock.
Chart Courtesy of StockCharts.com
Shareholders Collect Monthly Income
For income-focused investors, Sound Point Meridian Capital checks a lot of boxes. The fund currently has a robust forward dividend yield of 16.7%. This puts SPMC stock well ahead of the typical dividend stock or bond.
Good luck getting this sort of dividend yield with dividend aristocrats.
What makes SPMC stock stand out even more is its monthly distribution schedule. The fund pays $0.25 per month, for an annual payment of $3.00 per share.
So, 1,000 SPMC shares would generate monthly income of $250.00.
Instead of waiting a full quarter for cash flow, shareholders receive payments every 30 days. That makes it an excellent fit for retirees who need predictable income or investors looking to get some steady yield coming into their portfolios.
SPMC Stock Comes with Some Risks, Too
With Sound Point Meridian offering monthly income and with rates potentially coming down, it’s important that potential investors keep a clear head. SPMC stock, like any investment, comes with risks.
Since the company invests primarily in CLOs, its performance is tied to the credit quality of the underlying loans. If defaults rise, the cash flow available for distributions could come under pressure, which could impact Sound Point Meridian Capital’s robust dividends.
You should also know that this fund uses leverage, which can be a double-edged sword. It can amplify both gains and losses, especially in volatile environments.
Lastly, with such a high yield, investors need to monitor whether the fund’s distributions are being fully covered by income or there’s return of capital as well. This could impact the net asset value (NAV).
The Lowdown on SPMC Stock
Sound Point Meridian Capital Inc is a closed-end management fund with a clear focus on generating high income for investors. The fund invests in the equity and mezzanine tranches of CLOs.
When it comes to dividends, SPMC stock offers a forward yield of 16.7%. Its payout frequency is monthly, offering steady cash flow.
So, SPMC stock combines one of the highest yields available today with monthly payments and potential price appreciation.
