Business development corporations (BDCs) are a great addition to a high-yield portfolio. With yields over 8%, and sometimes even over 10%, these companies provide a strong income stream right now, and can bolster the overall yield of your portfolio. But BDCs can be dangerous. Because they are legally required to return 90% of their income to shareholders, and because they regularly issue a lot of new shares to expand operations, capital gains are rare in these asset classes and dividend cuts are common.
BDC investors need to carefully track how companies’ net investment income (NII) is trending, because they use NII to fund payouts. If NII falls below the dividend, a cut to payouts is likely. This happened early last year with Prospect Capital Corporation (PSEC). Investors might want to look for BDCs that have never cut their dividend. There is one: Main Street Capital Corporation (MAIN). At the same time, you want a company with strong management, a high yield, and strong dividend coverage. Triangle Capital Corporation (TCAP) fits this profile
Source: InvestorPlace
Related Articles:
- 8 Dividend Stocks For The Ultimate In Deferred Gratification
- 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
Dividend Growth Stocks News
- Dana Gas PJSC And 2 Other Middle Eastern Dividend Stocks - Yahoo Finance - 7/14/2025
- Top Asian Dividend Stocks To Consider In July 2025 - Yahoo - 7/14/2025
- 2 Dividend Stocks to Double Up on Right Now - Yahoo Finance - 7/12/2025
- Rs 59 Dividend stocks: 5 stocks turn ex-date today - FULL List - MSN - 7/14/2025
- Dividend stocks: These 8 stocks to go ex-date on July 15; do you own any? - Business Standard - 7/14/2025
A Secure 3-Stock Portfolio That Yields 10.5%
Posted by D4L | Monday, June 27, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.