Contrasting Tri Continental (NYSE:TY) & Morgan Stanley Direct Lending Fund (NYSE:MSDL)

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

Institutional and Insider Ownership

10.2% of Tri Continental shares are owned by institutional investors. 0.3% of Morgan Stanley Direct Lending Fund shares are owned by company insiders. Comparatively, 8.7% of Tri Continental shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Morgan Stanley Direct Lending Fund and Tri Continental, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley Direct Lending Fund	0	6	1	0	2.14
Tri Continental	0	0	0	0	0.00

Morgan Stanley Direct Lending Fund currently has a consensus target price of $15.62, suggesting a potential upside of 1.82%. Given Morgan Stanley Direct Lending Fund’s stronger consensus rating and higher probable upside, analysts clearly believe Morgan Stanley Direct Lending Fund is more favorable than Tri Continental.

Earnings and Valuation

This table compares Morgan Stanley Direct Lending Fund and Tri Continental”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley Direct Lending Fund	$397.29 million	3.25	$122.09 million	$0.69	22.24
Tri Continental	N/A	N/A	N/A	N/A	N/A

Morgan Stanley Direct Lending Fund has higher revenue and earnings than Tri Continental.

Risk and Volatility

Morgan Stanley Direct Lending Fund has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Tri Continental has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares Morgan Stanley Direct Lending Fund and Tri Continental’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley Direct Lending Fund	15.97%	9.49%	4.23%
Tri Continental	N/A	N/A	N/A

Dividends

Morgan Stanley Direct Lending Fund pays an annual dividend of $1.80 per share and has a dividend yield of 11.7%. Tri Continental pays an annual dividend of $1.11 per share and has a dividend yield of 3.1%. Morgan Stanley Direct Lending Fund pays out 260.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Morgan Stanley Direct Lending Fund beats Tri Continental on 8 of the 12 factors compared between the two stocks.

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 Tri Continental

Tri-Continental Corporation is a closed ended equity mutual fund launched and managed by Columbia Management Investment Advisers, LLC. It primarily invests in the public equity markets of the United States. The fund invests in stocks of companies that operate across diversified sectors. It seeks to invest in stocks of large-cap companies. The fund benchmarks the performance of its portfolio against S&P 500 Index. Tri-Continental Corporation was formed in January 1929 and is domiciled in the United States.