Dividend Increases For The High-Yield BDC Sector: Part 2

Business development companies, or BDCs, have begun reporting results, and this article discusses some of the items that investors should be watching.

Sources: SEC Filings and www.bdcbuzz.com.
In December 2018, I purchased additional shares of multiple 'oversold' higher-quality BDCs with risk-averse balance sheets prepared for a potential economic slowdown including Ares Capital (ARCC) at $15.27 for the reasons discussed in this article.
As investors jump back into financial stocks, the average BDC has easily outperformed the S&P 500 so far in 2019, but still has an average dividend yield of around 10.4%. It should also be noted that the average BDC continually outperforms high-yield corporate bond ETFs such as the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), and UBS ETRACS Wells Fargo Business Development Company ETN (BDCS).

Sources: SEC Filings and www.bdcbuzz.com.
Over the last eight weeks, I have had focus articles discussing MRCC, GAIN, OCSL, CGBD, FSK, HTGC, TPVG, GSBD, TCRD, PSEC, and PNNT.
ARCC had better price performance through December 31, 2018, and was not as oversold going into 2019 which is likely why it has not appreciated as much as the others.
It is interesting to note that BDCs with exposure to collateralized loan obligations (CLOs) such as PSEC, KCAP, and OXSQ are not having a good year so far.
BDC Dividend Changes For 2019
As mentioned in many... Read more