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Upcoming Rally For BDCs Currently Yielding 13%

Published Tue, 30 Jun 2020 10:50:48 -0400 on Seeking Alpha

Seeking AlphaDividend IdeasUpcoming Rally For BDCs Currently Yielding 13%Jun. 30, 2020 10:50 AM ET|| Includes: AINV, ARCC, CGBD, FSKR, GBDC, GLAD, GSBD, HTGC, MAIN, MRCC, NMFC, NMFX, ORCC, PSEC, TCPC, TPVG, TSLXby: BDC BuzzBDC Buzz Sustainable DividendsBuild a portfolio with sustainable dividend yields ranging from 8% to 12%SummaryAs predicted, BDC pricing has pulled back a bit, driving an average yield of 13%.
However, I believe that BDC pricing could rally as BDCs report stronger-than-expected Q2 results in four weeks.
This article discusses one of those BDCs which recently released preliminary results that has likely not been priced into the stock trading 18% below book value yielding 13.1%.



Quick BDC Market Update
As mentioned in previous articles, I was expecting Business Development Company ("BDC") pricing to pull back from recent highs for various reasons including profit-taking and a partial return to "risk-off" mode. Clearly the potential for additional or renewed lockdowns related to COVID-19 is a concern driving markets lower, including BDCs that are now yielding around 13% including New Mountain Finance (NMFC) which is discussed in this article.
I'm expecting volatility through July until BDCs start to report Q2 2020 results (see dates at the end). Many BDCs will likely be reporting stronger-than-expected results including net asset value (“NAV”) per share increases, adequate dividend coverage, and reaffirming current dividends. This will likely drive some positive headlines and another rally in BDC pricing as investors are looking to improve portfolio yield/returns in this low-interest-rate environment. However, there will be some lower-quality BDCs reporting NAV declines, one of which I will cover in an article next week.
NMFC has recently released mostly positive preliminary estimates for the quarter ended June 30, 2020, but has not been announced through the website or other news sources. NMFC is trading 18% below its... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
MONROE CAPITAL 10.48   18.4 0.57 1.40 13.60
PROSPECT CAPITAL 6.71   16.8 0.40 0.72 10.76
APOLLO INVESTMENT 16.78   14.2 1.18 1.80 10.73
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
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

MONROE CAPITAL - MRCC
MONROE CAPITAL - MRCC  


Older articles featuring Monroe Capital (MRCC):
69 10%+ Yield Dividend Dogs Priced $5-$15 For July
Dividends By The Numbers In June 2020 And 2020-Q2
The Worst May Be Behind Us For Coronavirus Recession Dividend Cuts
Earn An 8% To 10% Balanced Portfolio Yield Investing In America: Part 1
TCG: Why I Bought Carlyle Group's BDC Currently Yielding 21%
BDCs Continue To Affirm Dividends: Capital Southwest At 15%
Picking Winners And Losers In The 18% Yielding BDC Sector
High Yield: Owning BDCs During The Crisis
Quick BDC Market Update: 18% Average Yield But Continued Volatility
147 Broker Favored Financial Service Equities With Yields Priced Right

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