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2 Dividend Stocks To Buy With Improving Book Values, Both From PennantPark
Published Sun, 29 Nov 2020 08:00:00 -0500 on Seeking Alpha
Seeking AlphaDividend Ideas | Financials 2 Dividend Stocks To Buy With Improving Book Values, Both From PennantParkNov. 29, 2020 8:00 AM ET|| About: PennantPark Floating Rate Capital (PFLT), PNNT, Includes: AINV, ARCC, BDCS, CGBD, CMFNL, FCRD, FDUS, FSK, FSKR, GAIN, GBDC, GLAD, GSBD, HCXY, HCXZ, HTGC, MAIN, MRCC, NMFC, OCSL, ORCC, PNNTG, PSEC, TCRW, TCRZ, TPVG, TPVY, TSLXby: BDC BuzzBDC Buzz Sustainable DividendsBuild a portfolio with sustainable dividend yields ranging from 8% to 12%SummaryThe BDC sector continues to deliver strong returns during the pandemic, including recently improved earnings, dividend coverage, and increased book values.
This article discusses two stocks that I own and one of which I consider a 'Buy and Hold' that has provided excellent returns so far in 2020.
The other position is more of a trading position with upside potential (discussed below) and currently trading at a 42% discount to its book value.
Also included are my predictions for the general markets and BDC pricing over the next 2 to 3 months.
BDC investors typically get at least 2 to 3 buying points each year.
Introduction
This article is part of a series discussing how to build a retirement portfolio using general market volatility and business development companies ("BDCs"). Similar to REITs, BDCs are regulated investment companies (RICs) required to distribute more than 90% of their profits and gains to shareholders, avoiding corporate income taxes before distributing to shareholders.
This structure prioritizes income to shareholders (over capital appreciation), driving higher yields that currently range from around 7% to 13%. The following yields take into account special/supplemental dividends for 2020.
This article discusses PennantPark Investment (PNNT) and PennantPark Floating Rate Capital (PFLT) both of which were founded by Art Penn who also co-founded Apollo Investment (AINV) in 2004.
Quick BDC Market Update
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| 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 | |||||||
| FIDUS INVESTMENT | 14.84 | 8.8 | 1.69 | 1.56 | 10.53 | |||||||
| OAKTREE SPECIALTY LENDING | 4.90 | 0.0 | -1.39 | 0.50 | 10.02 | |||||||
| 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 | |||||||
| GLADSTONE INVESTMENT | 12.34 | 7.4 | 1.67 | 0.82 | 6.73 | |||||||
| MAIN STREET CAPITAL | 43.18 | 16.8 | 2.57 | 2.46 | 5.69 |