2 Undervalued Business Development Companies Paying High Dividends

Looking for undervalued high dividend stocks? Check out the unloved Financials sector, which is barely up 1% year to date, and lags all other sectors. Business Development Companies, (BDCs), are a sparsely-covered Financials sub-industry with some high dividend paying stocks, and low PEG ratios. We've also included an undervalued private equity firm which uses mezzanine debt. BDCs are similar to venture capital funds, in that they're created to help grow small companies in the early development stages. Many BDCs are set up much like closed-end investment funds and are listed on the NYSE, AMEX and Nasdaq. A big difference between a BDC and a venture capital fund is that BDCs allow smaller investors to invest in startups. BDCs have become popular because they provide permanent capital to their management, they allow investments by the general public and they use mezzanine financing opportunities, among other reasons. Here are 2 dividend stocks we found that currently look undervalued on a PEG ratio basis. (We've also added them to our High Dividend Stocks by Sector Tables:) Prospect Capital (PSEC): Founded in 1988, with an IPO in 2004. A mezzanine debt and private equity firm that manages a publicly-traded, closed-end, dividend-focused investment company which completed its IPO in 2004. Prospect primarily provides non-control debt financing to management teams or financial sponsors as well as selectively making control acquisitions by providing multiple levels of the capital structure. Using both partnership and publicly traded closed-end structures, Prospect has invested more than $2.5 billion since its inception in 1988 in multiple asset classes. PSEC seeks investments with historical cash flows, asset collateral, or contracted pro forma cash flows. Prospect's mutual fund has paid a continuous, regular dividend since inception. Although its past expertise has been in the energy and industrial sectors, Prospect Capital has broadened its scope to include healthcare, manufacturing, and specialty minerals among others.... Read more