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Assessing Risk: Retirement Portfolio Using BDCs Yielding 10%+

Published Thu, 11 Jul 2019 06:01:04 -0400 on Seeking Alpha

This article is a follow-up to "Part 1: Building A Retirement Portfolio With BDCs" that discussed retirement portfolio allocations including BDC stocks and their Baby Bonds as well as the timing for investing in the sector especially as it was/is headed into 'oversold' territory. As BDCs start to report June 30, 2019 results later this month (see schedule below), investors should be watching for potential portfolio credit issues.

What is a BDC?
Business Development Companies ("BDCs") were created by Congress in 1980 to give investors an opportunity to invest in private small and mid-sized U.S. companies typically overlooked by banks. Most BDCs are publicly traded with a highly transparent structure subject to oversight by the SEC, states and other regulators, providing investors with higher than average dividend yields (most between 7% and 13% annually, see details below) by avoiding taxation at the corporate level. This allows them to pass along ordinary income and capital gains directly to the shareholder.

Why do I like BDCs?
I like the idea of investing in companies that provide capital to smaller private businesses often unable to get growth capital from typical banks. Also, BDC stock pricing can be volatile which can be a good thing for investors that watch closely and take advantage of 'oversold' conditions. BDC fundamentals remain strong/stable including a healthy U.S. economy, low market defaults and most BDCs focused on protecting shareholder... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BLACKROCK KELSO CAPITAL 5.25   0.0 -0.12 0.56 13.61
MONROE CAPITAL 10.48   18.4 0.57 1.40 13.60
GARRISON CAPITAL 6.94   0.0 -0.17 0.92 13.35
CAPITALA FINANCE 8.19   0.0 -3.13 1.00 12.46
THL CREDIT 6.96   0.0 -0.86 0.84 12.09
PENNANTPARK INVESTMENT 6.32   21.8 0.29 0.72 11.32
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
GLADSTONE CAPITAL 9.50   63.3 0.15 0.84 8.84
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
CAPITAL SOUTHWEST 21.81   12.2 1.78 1.60 7.21
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
MEDLEY CAPITAL 2.61   0.0 -1.62 0.15 5.81
MAIN STREET CAPITAL 43.18   16.8 2.57 2.46 5.69

BLACKROCK KELSO CAPITAL - BKCC
BLACKROCK KELSO CAPITAL - BKCC  


Older articles featuring Blackrock Kelso Capital (BKCC):
Building A Retirement Portfolio With 6% To 9% Yield: Part 2
Building A Retirement Portfolio With 6% To 9% Yield: Part 1
BIZD: Attractive 9% Yield, But Widening Credit Spreads A Risk
9.4% Yield Driven By 14 Consecutive Dividend Hikes And Still Growing: Capital Southwest
LOUD Dogs Flash Dividend Yields, Upsides, And Gains In July
62 Dogs Cry Out LOUD By Dividend Yields, Upsides, And Net Gains For June
10% Yielding New Mountain Finance Receives Fitch Rating
Dividend Increases For The High-Yield BDC Sector, Part 5: BlackRock TCP Capital
Monroe Capital Offers 15% Yield Due To Portfolio Credit Issues
Tax-Loss Harvesting And Merger Fears Driving 10%+ Yield For BlackRock TCP Capital?

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