9% Dividend Yield Positioned For Rising Rates And Upcoming Special Dividend

As mentioned last week in "Another Big Win Driving Special Dividends And 9% To 10% Yield," I have been buying additional shares of higher quality business development companies ("BDCs"), especially given the oversold conditions driving higher yields. Many BDCs have been rallying over the last three to four months, likely for the reasons discussed in this and previous articles including:
Rising interest rates and portfolio yields Poorly managed BDCs taken over and turned around Recent insider purchases Relaxed regulations and tax reform I recently purchased additional shares of Ares Capital (ARCC) on May 2, 2018, due to the company reporting favorable Q1 2018 results as discussed in this article. After the company reported, not all investors agreed that the results were 'favorable' and the price dropped in morning trading which is where I purchased shares at an average price of $15.87 as shown below:

ARCC released its 10-Q SEC filing before the markets open which does not give investors much time to digest before trading begins. Throughout the day, the price rebounded and has continued higher as shown below:

Q2 2018 BDC Reporting Next week, ARCC and other BDCs will be reporting June 30, 2018, results and I will likely be making changes to my personal portfolio.

To be a successful BDC investor: Closely monitor your BDCs, including dividend coverage potential and portfolio credit quality. Identify BDCs that fit your risk... Read more