Blue Owl Capital: Buy the Next Dip Amid Strong Earnings and Technical Strength

Blue Owl Capital Corporation (OBDC) delivered strong financial results in Q2 2025, supported by solid investment income and disciplined portfolio management. The company reported higher net investment income and maintained a stable dividend. Its portfolio remains diversified and heavily weighted toward senior secured loans. This article discusses Blue Owl Capital’s earnings, dividend outlook, portfolio trends, and technical analysis to understand the stock’s next move.

Earnings Strength Reinforces Blue Owl Capital’s Investment Case

Q2 2025 Net Investment Income Surges on Efficient Management

Blue Owl Capital reported GAAP net investment income (NII) of $0.42 per share in Q2 2025. Moreover, the adjusted NII increased to $0.40 per share, slightly above $0.39 from Q1 2025. This improvement reflects stronger prepayment activity and higher one-time income from unscheduled loan paydowns. Specifically, paydown-related income jumped to $32.1 million from $8.2 million last quarter. This surge boosted overall investment income to $485.8 million, up from $464.6 million in Q1 2025.

CEO Craig Packer highlighted that the portfolio’s strong fundamentals support consistent earnings. The company generated an annualized return of 10.6% on adjusted NII. This validates management’s focus on high-quality credit selection and efficient capital deployment.

Total operating expenses increased to $266.8 million from $259.6 million. The increase came primarily from higher interest costs and performance-related fees, largely driven by the recent merger. Despite the increase in total expenses, overhead ratios such as professional and directors’ fees remained stable, demonstrating strong cost discipline excluding merger-related impacts.

Moreover, Blue Owl Capital had $360.2 million in cash and $3.7 billion in undrawn credit capacity. Total debt stood at $9.3 billion, split between 41% secured and 59% unsecured. The company complied with all debt covenants and maintains flexibility to pursue opportunities. Its strong capital base supports continued originations and dividend coverage across cycles.

Diversified Portfolio and Conservative Leverage Support NAV Stability

Blue Owl Capital maintains a diversified and resilient $16.9 billion portfolio across 233 companies in 30 industries. The portfolio is heavily weighted toward senior secured loans, with 81% in first and second lien positions, offering downside protection and stable income.

Borrower strength improved in Q2 2025, with weighted average revenue increasing to $997 million and EBITDA increasing to $222 million. Moreover, the leverage remains conservative, with the LTV ratio declining to 42% and interest coverage improving to 1.8x. This reflects stronger borrower credit health and supports Blue Owl Capital’s ability to deliver a 10.6% debt portfolio yield in a higher-rate environment.

The company rotated its portfolio more aggressively, improving liquidity and risk positioning. Net asset value (NAV) declined slightly to $15.03 from $15.14. This drop was due to write-downs on a few names, though partially offset by earnings exceeding dividends paid. Non-accrual investments dropped to 0.7% of fair value, down from 0.8%, indicating stable credit quality.

Loose Financial Conditions Create a Tailwind for Lending and Dividends

The chart below shows that the Chicago Fed National Financial Conditions Index has declined steadily since early 2023. The index has dropped below zero, signalling a loose credit environment that supports Blue Owl Capital.

When financial conditions are loose, borrowers experience lower stress, which reduces default risk across Blue Owl Capital’s portfolio. This environment also supports stable earnings by enabling the company to maintain strong loan performance and healthy net investment income.

Moreover, the easier financial conditions also increase liquidity and improve deal flow. Blue Owl Capital can originate more loans and recycle capital efficiently when credit markets are functioning smoothly. The drop in the index suggests that funding markets remain open and borrower demand stays strong. As a result, Blue Owl Capital can continue to deliver attractive yields and stable dividends, supported by a favourable macro backdrop.

Stable Dividends Yield Attract Long-Term Investors

The chart below shows the dividend history of Blue Owl Capital and highlights a consistent upward trend in shareholder returns since 2022. The regular dividend has steadily increased from $0.31 in Q2 2022 to $0.37 in Q2 2025. Moreover, the supplemental dividends range from $0.01 to $0.08, boosting total payouts and elevating total dividend yields to a peak of 11.2% in Q1 2024.

Despite minor fluctuations in supplemental amounts, the regular dividend yield remained stable near 9.7%–9.8%. The latest total yield of 10.4% in Q2 2025 reflects earnings strength and management’s commitment to returning excess income to shareholders while preserving long-term stability.

Technical Strength Points to Breakout Potential in Blue Owl Capital

Monthly Setup Builds Bullish Momentum Above Key Resistance

The long-term outlook for Blue Owl Capital remains strongly bullish, as shown in the monthly chart below. A period of consolidation in 2022 formed an inverted head and shoulders pattern, with the head at $7.42 and shoulders at $8.37 and $8.42. This pattern broke out above the $10.50 level, triggering a sharp rally that pushed the price to around $15 in 2024.

The stock has entered another consolidation phase after reaching record levels in 2024. These consolidation patterns are similar to the pattern seen in 2022. This recent structure has again formed an inverted head and shoulders, with the head at $11.78 and shoulders at $12.49 and $13.89. If the price breaks above the $15.16 resistance, it could confirm a new bullish leg higher.

The price compression following the 2023 breakout from the $10.50 region further supports the bullish thesis. The continued consolidation in 2025 reflects tightening price action, suggesting that a breakout above the current range could unleash another strong upward move.

Weekly Trend Suggests New Rally in Blue Owl Capital

A strong bullish price structure for Blue Owl Capital is also evident on the weekly chart, which shows an upward trend developing steadily since 2020. The price action gained momentum in 2022, breaking decisively above the $10.50 level. This breakout established a new bullish phase.

The chart reveals that significant resistance remains near the $15.20 area. The current price pattern closely mirrors earlier setups, suggesting that a breakout above $15.20 could trigger a strong move to the upside. Therefore, investors may consider accumulating Blue Owl Capital at current levels and add more positions if the price corrects lower.

Sideways Consolidation Creates Buy-the-Dip Opportunity Near Support

The daily chart for Blue Owl Capital shows that prices have been trading within a sideways pattern. Recently, the price began to drop from the $15.16 level. This decline, followed by consolidation within the red trend lines, suggests that Blue Owl Capital may correct lower before making its next upward move.

However, this pullback could offer a strong buying opportunity for investors. The short-term price action also reveals the formation of an ascending channel pattern from 2024 into 2025. Therefore, a breakout above the $15.16 resistance level would likely trigger a strong move to the upside.

Key Risks to Watch Before Buying the Dip

Blue Owl Capital’s strong earnings are partially supported by elevated interest rates. A decline in rates could reduce income from floating-rate loans and compress margins. The market currently faces declining employment levels and persistent inflation driven by Trump’s tariffs. Additionally, rising expectations of Fed rate cuts are adding to market uncertainty. This uncertainty is fuelling recession concerns, which could trigger a short-term decline in Blue Owl Capital.

While the portfolio remains well-diversified, exposure to certain industries may pose risks during a cyclical downturn. Write-downs in a few names have already led to a slight NAV decline in Q2 2025, and further borrower stress could increase unrealized losses.

Despite the bullish chart setup, Blue Owl Capital trades near key resistance around $15.20. The failure to break this level could trigger a deeper correction. On the other hand, broader market weakness or risk-off sentiment may also drag prices lower, even if fundamentals stay intact. Investors should monitor price action closely, as sentiment-driven pullbacks may challenge short-term positioning.

Blue Owl Capital Offers Growth, Yield, and a Bullish Technical Setup

Blue Owl Capital’s fundamentals and dividend consistency position it well for income-focused investors. The company continues to generate robust net investment income, backed by a diversified portfolio of senior secured loans and improving borrower health. Its conservative leverage, stable credit quality, and access to ample liquidity further enhance its resilience in various market cycles.

From a technical perspective, the stock is consolidating near key levels and appears to be setting up for the next surge. While short-term risks may lead to a minor pullback, such a dip is likely to offer a compelling buying opportunity for long-term investors. With double-digit yield potential and strong macro tailwinds, Blue Owl Capital remains well-positioned to deliver consistent income and long-term growth.