PennantPark Investment Corporation (PNNT): A Steady Performer in the BDC Space

PennantPark Investment Corporation (NYSE:PNNT) is included among the 11 Best BDC Stocks to Buy Now.

Image by Steve Buissinne from Pixabay

PennantPark Investment Corporation (NYSE:PNNT) is a business development company that invests in mid-sized firms — the kinds that typically don’t receive much attention from traditional banks. Because of that, it’s often able to secure higher returns on the loans it issues. By the end of June, marking the close of its fiscal third quarter, the company said its debt investments were pulling in an average yield of about 10.4%.

What really sets PennantPark Investment Corporation (NYSE:PNNT) apart, though, is how its portfolio is built. Nearly every loan it makes — roughly 99% — comes with a variable rate. That worked out perfectly when the Federal Reserve started hiking interest rates from early 2022 through mid-2023 to fight inflation. As rates climbed, PennantPark’s returns jumped more than five full percentage points. Now that the Fed has started easing up, it’s doing so at a slow and steady pace, which has allowed the company to keep earning strong yields across its loan book.

PennantPark Investment Corporation (NYSE:PNNT)’s monthly dividend policy is also its strengths. Where a lot of companies offer dividends on a quarterly basis, PNNT pays out every month, which makes it one of the best dividend stocks in the BDC sector. Currently, it offers a monthly dividend of $0.08 per share and has a dividend yield of 14.66%, as of October 5.

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Disclosure: None.