Head to Head Analysis: Morgan Stanley Direct Lending Fund (NYSE:MSDL) versus TriplePoint Venture Growth BDC (NYSE:TPVG)

Morgan Stanley Direct Lending Fund (NYSE:MSDL) and TriplePoint Venture Growth BDC (NYSE:TPVG) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Dividends

Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 11.5%. TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 14.0%. Morgan Stanley Direct Lending Fund pays out 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TriplePoint Venture Growth BDC pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TriplePoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Morgan Stanley Direct Lending Fund and TriplePoint Venture Growth BDC”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley Direct Lending Fund	$416.08 million	3.63	$215.56 million	$1.65	10.54
TriplePoint Venture Growth BDC	$108.65 million	2.45	$32.05 million	$0.85	7.75

Morgan Stanley Direct Lending Fund has higher revenue and earnings than TriplePoint Venture Growth BDC. TriplePoint Venture Growth BDC is trading at a lower price-to-earnings ratio than Morgan Stanley Direct Lending Fund, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for Morgan Stanley Direct Lending Fund and TriplePoint Venture Growth BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley Direct Lending Fund	0	5	2	0	2.29
TriplePoint Venture Growth BDC	3	4	0	0	1.57

Morgan Stanley Direct Lending Fund currently has a consensus target price of $17.75, suggesting a potential upside of 2.10%. TriplePoint Venture Growth BDC has a consensus target price of $6.25, suggesting a potential downside of 5.09%. Given Morgan Stanley Direct Lending Fund’s stronger consensus rating and higher probable upside, research analysts plainly believe Morgan Stanley Direct Lending Fund is more favorable than TriplePoint Venture Growth BDC.

Profitability

This table compares Morgan Stanley Direct Lending Fund and TriplePoint Venture Growth BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley Direct Lending Fund	35.92%	10.21%	4.70%
TriplePoint Venture Growth BDC	36.02%	12.88%	5.76%

Risk & Volatility

Morgan Stanley Direct Lending Fund has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500. Comparatively, TriplePoint Venture Growth BDC has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Institutional and Insider Ownership

12.8% of TriplePoint Venture Growth BDC shares are held by institutional investors. 0.2% of Morgan Stanley Direct Lending Fund shares are held by company insiders. Comparatively, 1.5% of TriplePoint Venture Growth BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

About Morgan Stanley Direct Lending Fund

Morgan Stanley Direct Lending Fund is a business development company. It is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. Morgan Stanley Direct Lending Fund is based in NEW YORK.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.