Published Tue, 24 Jul 2018 14:29:08 -0400 on Seeking Alpha
Main Thesis In this article, we will review the VanEck Vectors BDC Income ETF (BIZD). With a composition of high-yield equities, this ETF can indeed offer prospective investors strong equity income. With a portfolio of common stocks that offer floating rate loans to private middle market companies, BIZD has realized the benefits of rising short-term rates. Notwithstanding this and the fact that the ETF has the distributions well covered, I cannot recommend holding BIZD as a core equity income holding because high fees have effectively eroded capital growth for investors. As an alternative asset class, this BDC fund can best be used as a supplement to deliver yield in the right circumstances.
Assessment of distribution
(Source: Original Image - Data from Yahoo Finance)
For an unlevered fund made up of a portfolio of equities, a trailing 12-month yield of 8.48% is very impressive. Furthermore, you can see from the chart above that the ETF has delivered on its value proposition. Since inception, the quarterly distribution has been trending upwards as short-term rates have risen. Of course, as it is made up of high-yield equities, not only should total return be considered, but is the distribution sustainable?
(Source: Fund Factsheet)
The BDC business model: Provide floating rate loans to private middle market companies. Despite the fact that these loans are typically secured with property, the average credit rating for the borrowers are... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
Older articles featuring Ares Capital (ARCC):Dividend Increases For The High-Yield BDC Sector, Part 3: TPG Specialty Lending
Dividend Increases For The High-Yield BDC Sector: Part 1
Dividend Portfolio Review: 22% Y/Y Growth In January
Is FS KKR Capital's 12.2% Yield At Risk?
66 'Safer' Dividend Sector-Leading WallStars Show Profits And Cash To Cover Dividends For 2019
Shutdown Could Be A Win For These High-Yield Venture Debt Providers
Analyzing Main Street Capital's Dividend Sustainability (Projected 2019 Monthly And Special Periodic Dividend Changes)
11.1% Yielding Portfolio With Good Coverage And Decent Growth Prospects
Income Investors: Should You Buy Higher Dividends Or Dividend Growth In 2019?
THL Credit: Priced For A Dividend Cut, Driving 16.2% Yield And Continued Rally