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
________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
Utility stocks have been relatively volatile in the recent past. However, most utility stocks have a low beta and have a stable cash flow vi...
-
Many investors search for safe, dividend-paying stocks. As John D. Rockefeller once said: "Do you know the only thing that gives me ple...
-
With interest rates near zero, many investors are turning to dividend stocks for income. And for some investors, the higher the yield, the b...
-
Dividend stocks have fallen out of fashion during the pandemic. With interest rates at rock-bottom levels, investors have fled from assets l...
-
One way to identify suitable candidates is to look for stocks with an average dividend yield of 3%, and positive average annual dividend gro...
-
The rollout of fifth-generation network services, also known as 5G, enhances the appeal of each of these three dividend-paying, 5G technolog...
-
Energy Transfer (NYSE:ET) pays a monster cash distribution. Given the big slide in its unit price, -- they're down more than 50% in the ...
-
With interest rates stuck below 1%, finding income in today's market can be difficult. Therefore it makes sense for income investors to ...
-
These stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sust...
-
Unfortunately, some investors that are new to dividend stocks end up chasing the highest yield stocks they can find and end up getting burne...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.