Published Sun, 26 Apr 2020 10:00:00 -0400 on Seeking Alpha
BDCs provide investors with higher-than-average dividend yields (most between 10% and 30% annually). However, I'm expecting some dividend reductions or temporary suspensions when they report results.
As predicted in the previous article, CSWC slightly increased its regular quarterly dividend in February 2020 and continues to pay its $0.10 per share supplemental dividends.
On April 22, 2020, CSWC’s Board recently declared a total dividend of $0.51 per share for the quarter ended June 30, 2020.
BDCs will begin reporting results next week and investors should be paying close attention.
As mentioned earlier this month in "Picking Winners And Losers In The 18% Yielding BDC Sector," Business Development Companies continue to trade at depressed values for many reasons including being considered small cap, financial sector, and high yield, all of which have been subject to indiscriminate selling. Also discussed was assessing which BDCs will outperform using Gladstone Investment (GAIN) as an example. This article discusses Capital Southwest Corp (CSWC) which I purchased additional shares of last month along with 13 other BDCs discussed at the end along with my overall strategy for 2020.
CSWC Insider Purchases
Last month, insiders were actively purchasing additional shares below
Current BDC Yields
BDC pricing is directly correlated to yield expectations from the market for non-investment grade debt including BofA Merrill Lynch US Corporate B Index’ (Corp B) that I watch closely, typically making massive purchases as yields start to spike as they did last month:
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 10% and 30% annually). However, I'm expecting quite a few to cut or temporarily suspend dividends when they report results (see dates at the... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|STELLUS CAPITAL INVESTMENT||13.45||8.2||1.65||1.36||10.16|
|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|
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