A 13% Yielder You Likely Haven’t Considered

Business development companies (BDCs) have been some of Wall Street’s best-kept income secrets. BDCs are generally in the middle-market financing business, earning oversized interest income in the process. They are also pass-through entities, meaning that, as long as a BDC distributes most of its profits to shareholders through dividends, it pays little to no income tax at the corporate level. Because BDCs don’t serve consumers directly, most people have never heard of them. But due to the nature of their business, BDCs could be great yield-boosters for an income portfolio.

Take Monroe Capital Corp (NASDAQ:MRCC), for instance. The Chicago-based BDC is in the business of providing customized financing solutions to lower middle-market companies in the U.S. and Canada. With a market capitalization of around $219.0 million, Monroe Capital stock is not really big enough to make headlines in the financial media. But this little-known stock could present a big-yield investment opportunity. The company currently follows a dividend policy that pays $0.35 per share every quarter. With MRCC stock trading at $10.74 apiece, the BDC offers investors an annual dividend yield of 13%.

Source: Income Investors

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