Picking Winners And Losers In The 18% Yielding BDC Sector

BDCs continue to trade at depressed prices offering an average yield of 18% before taking into account some of the likely dividend reductions.
Investors should be assessing the capital structures of each BDC to pick the upcoming winners and losers as discussed in this article.
BDCs with lower leverage especially using flexible financing will be among the winners.
Also, BDCs with access to larger credit platforms and have built portfolios with an economic recession in mind will outperform.
Current BDC Yields of 17% (Before Likely Cuts)
Business Development Companies ("BDCs") continue to trade at depressed values for many reasons including being considered small/micro-cap, financial sector, and high-yield all of which have been subject to indiscriminate selling (including margin calls) related to the current economic environment.
This is understandable and investors need to closely assess which BDCs will outperform when they start to report March 31, 2020, results in less than 3 weeks. This article should help investors understand what to look before and after each company provides updated financial results.
Most BDCs are publicly traded with a highly transparent structure subject to oversight by the SEC, states and other regulators, providing investors with higher-than-average dividend yields (most between 10% and 30% annually). However, I am expecting quite a few to cut or temporarily suspend dividends when they report results (see dates at the end).

I do not actively cover many of the higher yield BDCs listed in the table above many of which will likely be reducing dividends next month.
Currently, GAIN is the lowest-yielding BDC as it has recently had better price-performance likely for the reasons discussed below.
Capitalization & Leverage
This market is putting our financial system to the test not to mention small and mid-sized companies that are the heart of BDC investments. This means we need to take a close look at the... Read more