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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 11.52   19.9 0.58 1.40 11.85
PENNANTPARK INVESTMENT 6.36   14.1 0.45 0.72 11.15
APOLLO INVESTMENT 16.29   16.1 1.01 1.80 11.11
KOHLBERG CAPITAL 3.75   0.0 -0.25 0.40 11.05
PROSPECT CAPITAL 6.33   10.6 0.60 0.72 10.96
OAKTREE SPECIALTY LENDING 4.90   0.0 -1.39 0.50 10.02
HERCULES TECH GROWTH CAP 12.83   9.0 1.42 1.28 9.91
FIDUS INVESTMENT 15.92   8.5 1.87 1.56 9.89
TCP CAPITAL 14.43   20.0 0.72 1.44 9.80
PENNANTPARK FLOATING RATE CAPITAL 11.62   29.0 0.40 1.14 9.74
GOLDMAN SACHS BDC 19.83   21.3 0.93 1.80 9.12
ARES CAPITAL 17.86   9.2 1.95 1.60 8.87
SOLAR SENIOR CAPITAL 16.26   16.8 0.97 1.41 8.70
GOLUB CAPITAL BDC 17.82   14.6 1.22 1.28 7.26
GLADSTONE INVESTMENT 11.70   4.7 2.48 0.82 6.99
MAIN STREET CAPITAL 41.52   14.4 2.89 2.40 5.91
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 107.88   0.0 0.00 6.08 5.64
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 86.35   0.0 0.00 4.59 5.32

MONROE CAPITAL - MRCC
MONROE CAPITAL - MRCC  


Older articles featuring Monroe Capital (MRCC):
Prospect Capital: Upcoming Credit Issues And 11%+ Yielding Replacement
Yield-Starved Investors Still Accumulating BDCs Paying More Than 10% Annually
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 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
Dividend Increases For The High-Yield BDC Sector: Part 1

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