Head-To-Head Contrast: CION Investment (NYSE:CION) & Sixth Street Specialty Lending (NYSE:TSLX)

CION Investment (NYSE:CION) and Sixth Street Specialty Lending (NYSE:TSLX) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Dividends

CION Investment pays an annual dividend of $1.44 per share and has a dividend yield of 14.2%. Sixth Street Specialty Lending pays an annual dividend of $1.84 per share and has a dividend yield of 8.1%. CION Investment pays out 282.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sixth Street Specialty Lending pays out 90.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CION Investment has increased its dividend for 1 consecutive years. CION Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares CION Investment and Sixth Street Specialty Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CION Investment	10.59%	12.02%	4.91%
Sixth Street Specialty Lending	41.24%	13.20%	6.08%

Earnings and Valuation

This table compares CION Investment and Sixth Street Specialty Lending”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CION Investment	$37.68 million	14.03	$33.90 million	$0.51	19.90
Sixth Street Specialty Lending	$482.53 million	4.46	$220.02 million	$2.04	11.16

Sixth Street Specialty Lending has higher revenue and earnings than CION Investment. Sixth Street Specialty Lending is trading at a lower price-to-earnings ratio than CION Investment, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

CION Investment has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Sixth Street Specialty Lending has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for CION Investment and Sixth Street Specialty Lending, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CION Investment	1	1	0	1	2.33
Sixth Street Specialty Lending	0	2	7	1	2.90

CION Investment presently has a consensus price target of $8.50, indicating a potential downside of 16.25%. Sixth Street Specialty Lending has a consensus price target of $23.50, indicating a potential upside of 3.24%. Given Sixth Street Specialty Lending’s stronger consensus rating and higher possible upside, analysts plainly believe Sixth Street Specialty Lending is more favorable than CION Investment.

Institutional & Insider Ownership

32.0% of CION Investment shares are held by institutional investors. Comparatively, 70.3% of Sixth Street Specialty Lending shares are held by institutional investors. 0.6% of CION Investment shares are held by company insiders. Comparatively, 3.3% of Sixth Street Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Sixth Street Specialty Lending beats CION Investment on 12 of the 17 factors compared between the two stocks.

About CION Investment

CION Investment Corporation is a business development company. It specializes in investments in senior secured loans, including unitranche loans, First Lien, second lien loans, long-term subordinated loans, and mezzanine loans; equity interests such as warrants or options; and corporate bonds; and other debt securities in middle-market companies. The firm invests in growth capital, acquisitions, leveraged buyouts, market/product expansion, refinancing and recapitalization. The fund also invests up to 30 percent of their assets opportunistically in other types of investments, including the securities of larger public companies and foreign securities. It also makes investments in the secondary loan market. The fund does not invest in start-up companies, turnaround situations, or companies with speculative business plans. The fund prefers to invest in high tech industries, healthcare, pharmaceuticals, business services, media, chemicals, plastic, rubber, telecommunication, consumer services, advertising, printing and publishing, consumer goods, durables, diversified financials, and other industries. It also invests in homebuilding, restaurants, beverage and tobacco bars, broadcasting, distributors, Non-durable good distribution, food beverage and tobacco, energy, oil gas and consumables fuels, insurance, aerospace and defense, industrial machinery, paper and forest product machinery, information technology, metals and mining, and real estate. It primarily seeks to invest in the United States. The fund seeks to invest between $5 million and $50 million in companies with an EBITDA between $25 million and $75 million with average targeted hold of $25 million. It also purchases minority interests in the form of common or preferred equity in the target companies, typically in conjunction with its debt investments or through a co-investment with a financial sponsor. The fund seeks to exit its investments through an initial public offering of common stock, a merger, a sale, or other recapitalization.

About Sixth Street Specialty Lending

Sixth Street Specialty Lending, Inc. (NYSE: TSLX) is a business development company. The fund provides senior secured loans (first-lien, second-lien, and unitranche), unsecured loans, mezzanine debt, and investments in corporate bonds and equity securities and structured products, non-control structured equity, and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations, and refinancing. The fund invests in business services, software & technology, healthcare, energy, consumer & retail, manufacturing, industrials, royalty related businesses, education, and specialty finance. It seeks to finance and lending to middle market companies principally located in the United States. The fund invests in companies with enterprise value between $50 million and $1 billion or more and EBITDA between $10 million and $250 million. The transaction size is between $15 million and $350 million. The fund invests across the spectrum of the capital structure and can arrange syndicated transactions of up to $500 million and hold sizeable positions within its credits.