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Dividend Increases For The High-Yield BDC Sector: Part 1

Published Tue, 05 Feb 2019 11:56:51 -0500 on Seeking Alpha

Business development companies, or BDCs, have begun reporting results and this article discusses some of the items that investors should be watching.

Sources: SEC Filings and bdcbuzz.com.
In December 2018, I purchased additional shares of multiple 'oversold' higher-quality BDCs with risk-averse balance sheets prepared for a potential economic slowdown. As investors jump back into financial stocks, the average BDC has easily outperformed the S&P 500 so far in 2019 but still have an average dividend yield of around 10.4%:

Sources: SEC Filings and bdcbuzz.com.
In the previous table, Medley Capital (MCC) is an outlier for many reasons, including being one of the worst-run BDCs of all time. The stock has been rallying on merger hopes. Please note that the RSI has recently spiked to 70 and is likely in overbought territory.

BDC Dividend Changes For 2019
As mentioned in many of my recent articles, there are a handful of BDCs that will likely cut dividends in 2019. However, there are also many more that will likely increase their current regular dividend and/or pay special dividends this year. This article discusses dividend coverage for Prospect Capital (PSEC), Oaktree Specialty Lending (OCSL), and PennantPark Investment (PNNT), all of which cut dividends in 2017/2018, as predicted in my previous articles:
"Oaktree Management Fees Driving Upcoming Dividend Cuts" mentioned "The reduced income and hurdle rate will result in much lower than... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MONROE CAPITAL 12.15   21.0 0.58 1.40 11.56
APOLLO INVESTMENT 16.03   15.9 1.01 1.80 11.26
HERCULES TECH GROWTH CAP 13.24   9.3 1.42 1.28 9.60
FIDUS INVESTMENT 16.31   8.7 1.87 1.56 9.55
PENNANTPARK FLOATING RATE CAPITAL 11.94   29.8 0.40 1.14 9.40
ARES CAPITAL 17.88   9.2 1.95 0.16 8.97
GLADSTONE CAPITAL 9.33   31.1 0.30 0.84 8.96
SOLAR SENIOR CAPITAL 16.61   17.1 0.97 1.41 8.33
GOLUB CAPITAL BDC 17.78   14.6 1.22 1.28 7.20
MEDLEY CAPITAL 2.82   0.0 -1.55 0.20 7.12
GLADSTONE INVESTMENT 11.67   4.7 2.48 0.82 7.03
MAIN STREET CAPITAL 40.65   14.1 2.89 2.40 5.86
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 107.06   0.0 0.00 6.08 5.64
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 85.65   0.0 0.00 4.59 5.33

MONROE CAPITAL - MRCC
MONROE CAPITAL - MRCC  


Older articles featuring Monroe Capital (MRCC):
10% Yielding New Mountain Finance Receives Fitch Rating
Apollo Investment: 12% Yield Supported By Improving Portfolio Quality
Strong Buy With 12% Yield With 30%+ Return Potential: TCG BDC
My Dividend Growth Portfolio Off To A Good Start In 2019
Dividend Cuts For The High-Yield BDC Sector
Dividend Increases For The High-Yield BDC Sector, Part 4: Main Street Capital
Dividend Increases For The High-Yield BDC Sector, Part 3: TPG Specialty Lending
Dividend Increases For The High-Yield BDC Sector: Part 2
Is FS KKR Capital's 12.2% Yield At Risk?
Shutdown Could Be A Win For These High-Yield Venture Debt Providers

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