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.

Big Dividend BDCs: Ranking The Best And Worst

It’s been a choppy year so far for big-dividend Business Development Companies (BDCs). This has created some attractive buying opportunities as the market moved from January/February distress, to a near-infatuation with yield in the months that followed, and then a more recent pullback since the beginning of September.

As a follow-on to our recent article “Big Dividend REITs: Ranking the Best and Worst,” this article provides a ranking of the best and worst performing BDCs this year, and then details seven specific guidelines that we believe are worth considering before making an investment, especially given our current market conditions.

For starters, the following table ranks the best and worst performing BDC this year by total return (dividends plus price appreciation).

Picture1m4b.png

We believe the following seven guidelines are worth considering before investing, especially given our current market conditions.

The recent pullback has created opportunity.

As the previous chart shows, BDCs, as measured by the ETRACS Business Development Company ETN (BDCS), have declined 5.8% since the start of September, whereas the S&P 500 (SPY) has pulled back only 3.6%. This decline comes as investors fear the approaching US Federal Reserve interest rate hike will slow growth for many of the middle market companies in which BDCs invest (these companies required debt to grow, and that debt is becoming more expensive thereby making growth more challenging). However, we believe much of that fear is already backed into prices, and the pullback has created a more attractive entry point for long-term income-focused investors to pick up attractive yield. For example, we like Ares Capital Corporation (NASDAQ:ARCC), and you can read our views on that BDC here: Ares Capital: Big Dividend, 3 Big Risks.

Follow Ares Capital Corp (NASDAQ:ARCC)
Trade (NASDAQ:ARCC) Now!

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.
Loading...