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Dividend Cuts For The High-Yield BDC Sector

Published Tue, 05 Mar 2019 13:11:11 -0500 on Seeking Alpha

Business development companies, or BDCs, are almost finished reporting calendar year-end results, and this article discusses some of the items that investors should be watching when THL Credit (TCRD) reports later this week. Also discussed is the recent dividend cut for one of the worst-managed BDCs, Medley Capital (MCC).
Quick BDC Market Update
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 has an average dividend yield of around 10%. The average BDC continually outperforms high-yield corporate bond ETFs such as the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), and UBS ETRACS Wells Fargo Business Development Company ETN (BDCS). It should also be noted that the following table does not take into account returns from dividends.

Sources: SEC filings and www.bdcbuzz.com.
It is interesting to note that BDCs with exposure to collateralized loan obligations ("CLOs") such as PSEC, KCAP, and OXSQ, are not having a good year so far. Over the last 10 weeks, I have had focus articles discussing MRCC, GAIN, OCSL, CGBD, FSK, HTGC, TPVG, GSBD, TCRD, PSEC, and PNNT.
BDCs such as NMFC, GBDC, ARCC, TCPC, MAIN, and TSLX had better price performance near the end of... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MONROE CAPITAL 10.48   18.4 0.57 1.40 13.60
PENNANTPARK INVESTMENT 6.32   21.8 0.29 0.72 11.32
KOHLBERG CAPITAL 3.75   0.0 -0.25 0.40 11.05
PROSPECT CAPITAL 6.71   16.8 0.40 0.72 10.76
APOLLO INVESTMENT 16.78   14.2 1.18 1.80 10.73
FIDUS INVESTMENT 14.84   8.8 1.69 1.56 10.53
TCP CAPITAL 13.75   29.3 0.47 1.44 10.48
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
PENNANTPARK FLOATING RATE CAPITAL 11.68   30.0 0.39 1.14 9.81
HERCULES TECH GROWTH CAP 13.26   10.0 1.32 1.28 9.55
GOLDMAN SACHS BDC 20.29   22.5 0.90 1.80 8.88
ARES CAPITAL 19.19   10.5 1.82 1.60 8.39
SOLAR SENIOR CAPITAL 17.32   18.8 0.92 1.41 8.17
GOLUB CAPITAL BDC 18.55   15.7 1.18 1.28 6.89
GLADSTONE INVESTMENT 12.34   7.4 1.67 0.82 6.73
MAIN STREET CAPITAL 43.18   16.8 2.57 2.46 5.69
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 108.94   0.0 0.00 6.07 5.58
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 87.32   0.0 0.00 4.60 5.27

MONROE CAPITAL - MRCC
MONROE CAPITAL - MRCC  


Older articles featuring Monroe Capital (MRCC):
Upcoming NAV Changes For The BDC Sector Yielding 14%
69 10%+ Yield Dividend Dogs Priced $5-$15 For July
Dividends By The Numbers In June 2020 And 2020-Q2
Upcoming Rally For BDCs Currently Yielding 13%
The Worst May Be Behind Us For Coronavirus Recession Dividend Cuts
Earn An 8% To 10% Balanced Portfolio Yield Investing In America: Part 1
TCG: Why I Bought Carlyle Group's BDC Currently Yielding 21%
BDCs Continue To Affirm Dividends: Capital Southwest At 15%
Picking Winners And Losers In The 18% Yielding BDC Sector
High Yield: Owning BDCs During The Crisis

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