Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

BDC’s: What Am I Buying? Prospect Capital Corporation (PSEC), Apollo Investment Corp. (AINV) and More

This is not to say that management will always be correct in their choice of acquisition or investment. For example, buried deep in the 2011 annual report of Main Street Capital Corporation (NYSE:MAIN) is a discussion of the $1.2 million loss incurred on hybrid bicycle manufacturer Currie Tech. As a shareholder, a loss like this is passed directly through into the price of common stock. So when a management team makes a bad bet, shareholders lose value as well.  CEO Vincent Foster recently reiterated that the current performance of the 136 portfolio companies of Main Street Capital is expected to remain strong and the 6% dividend safe.

With the type of diversification and high yields that both Prospect and Apollo offer, they are good additions to a well-rounded portfolio. Wise BDC investors will take the time to read through financial statements and conduct research to understand exactly which BDC is right for their portfolio.  The reward for this research will be a steady and safe dividend.

The article BDC’s: What Am I Buying? originally appeared on Fool.com and is written by Spencer Houlihan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.