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8% To 10% Balanced Portfolio Yield Investing In America: Part 2

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
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
FIDUS INVESTMENT 14.84   8.8 1.69 1.56 10.53
TCP CAPITAL 13.75   29.3 0.47 1.44 10.48
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
NEWTEK BUSINESS SERVICES 22.91   0.0 0.00 2.32 8.09
CAPITAL SOUTHWEST 21.81   12.2 1.78 1.60 7.21
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


Older articles featuring Capitala Finance (CPTA):
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The Top Monthly Pay Dividend Stocks And Funds For August
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Earn An 8% To 10% Balanced Portfolio Yield Investing In America: Part 1
Top Monthly Paying Dividend Stocks And Funds, Your Mid-May Update
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