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
A Secure 3-Stock Portfolio That Yields 10.5%
Posted by D4L | Monday, June 27, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
BDCs can be excellent investment options for those seeking high returns, particularly when acquired at favorable valuations and supported by...
-
Today we'll talk dividend deals. Big payers. Stocks yielding up to 10.3% and trading for as little as three-times free cash flow (FCF). ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.