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|
|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|
|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|
|MAIN STREET CAPITAL||43.18||16.8||2.57||2.46||5.69|
Older articles featuring Blackrock Kelso Capital (BKCC):Earn An 8% To 10% Balanced Portfolio Yield Investing In America: Part 1
Quick BDC Market Update: 18% Average Yield But Continued Volatility
Why Investors Are Selling 12% Yielding Monroe Capital
Juul Investor BlackRock TCP Capital Currently Yielding 10.3%
Building A Retirement Portfolio With 6% To 9% Yield: Apollo Investment
Building A Retirement Portfolio With 6% To 9% Yield: Part 5
Building A Retirement Portfolio With 6% To 9% Yield: Part 4
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