When it comes to investing in BDCs, assessing management is the most important and part of my "qualitative" measures for valuing BDCs, and is the primary difference between companies that outperform (pricing and operating results). Management is in direct control of managing the capital structure and dividend policy as well as adjusting the expense structure including management fees. Higher quality BDCs are actively trying to increase returns to shareholders through 'doing the right thing' such as updated/revised fee agreements that protect shareholders during capital losses, not issuing shares below net asset value ("NAV"), meaningful share repurchases when trading well below (10% or more) NAV per share, waiving or reducing management fees to protect dividend coverage rather than cutting distributions, conservative accounting policies that appropriately mark assets closer to comparable market valuations as well as amortizing fee and onetime income to smooth out earnings and fees paid to management.
The reason that this series covers BDCs with longer operating histories is because it is easier to assess the quality of management using "quantitative" results such as the ones listed below. However, it is important to point out that lower performing BDCs such as Apollo Investment (NASDAQ:AINV), BlackRock Capital Investment (NASDAQ:BKCC) and Gladstone Capital (NASDAQ:GLAD) have either replaced management and/or taken major course correction steps in the last two to three years. The only changes to dividends over the last few quarters is a monthly dividend increase for Main Street Capital (NYSE:MAIN) and decrease in the quarterly dividend for KCAP Financial (NASDAQ:KCAP).
Source: Seeking Alpha
Related Articles:
- The Most Important Thing To Consider When Selecting A Dividend Stock
- 5 Healthcare Stocks With Growing Dividends Yielding In Excess of 2%
- 3 Powerful Concepts for Compounding Wealth with Dividend Stocks
- Why We Are Dividend Growth Investors
- 5 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income
BDCs: 7 Years Of 20% Annual Returns
Posted by D4L | Friday, May 20, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
The best dividend stock nobody is talking about is an undervalued, high-dividend chemical company poised to grow at an exponential rate. Wit...
-
If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the ...
-
A full-blown recession, or the late-year rally in Wilson’s view – the natural move for investors will be toward defensive stocks, moves to p...
-
The Dividend Kings, which are those stocks with at least 50 years of dividend growth, is an excellent place to find high quality names. Ther...
-
This company has raised its dividend for 62 years straight. Dividend stocks are an excellent way to build your wealth over time. According t...
-
When it comes to valuation, most investors fall back on things like the price-to-earnings (P/E) ratio. Earnings are too variable for me, so ...
-
Investors need to seek out stocks of established companies that have a track record of delivering consistent, reliable returns to shareholde...
-
Investing in dividend growth stocks is an excellent strategy to build sustainable wealth for the long haul. This is because only the best st...
-
Downturns are a great time to load up on high-quality dividend stocks. Falling share prices pump up dividend yields, and that means you'...
-
We've got 3 picks with dividend yields from 7.5% to 13.1%. Each share also has a significant discount to either projected current book v...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.