Published Sun, 14 Jun 2020 10:03:00 -0400 on Seeking Alpha
This is a series of articles discussing retirement portfolios using BDCs currently yielding more than 12% and their safer notes, baby bonds/preferred shares with yield-to-maturities ranging from 6% to 9%.
This article discusses the interest expense and asset coverage ratios for one of the higher-yield BDCs (~13.5%) and its three Baby Bonds that I own.
This information is used along with portfolio credit quality to rank each Baby Bond as "Lower Risk," "Average Risk," or "Higher Risk."
Then I use the BDC Google Sheets to track real-time pricing, accrued interest, effective yields, yield-to-call, and yield-to-maturity to assess which ones are "Buys," "Holds" and "Sells."
BDCs will begin reporting results next month and investors should be watching closely and ready for a wide range of "winners" and "losers."
Over the coming months, I will have a series of articles discussing how to build a retirement portfolio using Business Development Companies ("BDCs") currently yielding over 12% and their safer notes - baby bonds/preferred shares with yield-to-maturities ranging from 6.5% to 9.0%.
This article discusses Fidus Investment (FDUS) currently yielding 13.5% and its Baby Bonds that trade under the symbols “FDUSG”, “FDUSZ” and “FDUSL" currently with yield-to-maturities between 8% and 9%.
Business Development Companies 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. The following slide from Ares Capital (Nasdaq: ARCC) breaks out many of the requirements of the BDC/RIC structure including 70% of assets in U.S. private companies diversified by size and sector.
Most BDCs typically do not directly invest in travel, entertainment, retail, restaurants, sporting event-related businesses, airlines, oil/energy, etc., and if they do... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|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|
|NEWTEK BUSINESS SERVICES||22.91||0.0||0.00||2.32||8.09|
|MAIN STREET CAPITAL||43.18||16.8||2.57||2.46||5.69|
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