In this yield-starved market, many investors have boarded the BDC (business development company) train. BDCs got pounded in the March 2020 COVID crash due to the uncertainty surrounding the underlying companies that they invest in. This stock yields 8.23% - management expects to keep paying an extra $.10/quarter in 2021. Trailing regular dividend coverage is 1.08X, with additional undistributed net income of $.92. Valuations, profitability, leverage, and performance vs. BDC industry averages are detailed in this article.
BDCs have rebounded strongly since then, and more recently as well, as we've detailed in our articles. A good example of this is Capital Southwest Corporation (CSWC). CSWC is an internally-managed BDC, specializing in credit and private equity and venture capital investments in lower and middle market companies. It doesn't invest in startups, publicly-traded companies, real estate developments, project finance opportunities, oil and gas exploration businesses, troubled companies, turnarounds, and companies in which significant senior management is departing.
Source: Seeking Alpha
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