Dividends4Life: This 8% Yielding Quality BDC Has Significant Excess Dividend Coverage

Income investors often tend to buy the biggest names in a sector. In the case of Business Development Companies, investors most often buy the companies with the highest visibility in the sector. However, casting a little bit of a wider net and looking at lesser known Business Development Companies can also wash up some interesting income opportunities. This company is an interesting alternative to better known BDC household names. 90% floating-rate loan exposure and a ~1.24x dividend coverage ratio support the bull case. Though it sells for a premium to Net Asset Value, I think the BDC is a highly attractive income investment. An investment in the stock at this point yields 7.83 percent.

Goldman Sachs BDC (NYSE:GSBD) is a lesser known high-yielding income stock with strong business performance, an appealing dividend coverage ratio, and significant floating-rate loan exposure that could translate into dividend growth once the Federal Reserve's works up the courage to raise interest rates. Like most Business Development Companies, GSBD largely invests in relatively secure 1st and 2nd liens. 91 percent of the BDC's end of September investments were either 1st or 2nd liens.

Source: Seeking Alpha

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