Why Prospect Capital Corporation (PSEC) Stands Out as a Promising BDC Dividend Stock in 2025

Prospect Capital Corporation (NASDAQ:PSEC) is included among the 11 Best BDC Stocks to Buy Now.

Prospect Capital Corporation (NASDAQ:PSEC) is a business development company that lends money to mid-sized firms in the United States. Most of what it does involves senior and first lien loans, along with some second lien lending. The company also takes smaller equity positions when there’s room for growth, which can add a bit of upside on top of the regular interest income it earns.

Lately, Prospect Capital Corporation (NASDAQ:PSEC)’s focus has been on keeping risk under control. Prospect has been moving more of its capital into first lien senior secured loans and cutting back on complex, higher-risk investments. It’s also been trying to manage its funding costs more efficiently. The idea is to build a portfolio that generates steady income while holding on to the tax benefits that come with being a BDC. The leadership team has been around for a long time and owns a decent chunk of the company, which helps keep their interests in line with shareholders.

Prospect Capital Corporation (NASDAQ:PSEC) offers payouts on a monthly basis to shareholders, with its current dividend coming in at $0.045 per share. As of October 5, the stock has a dividend yield of 19.42%.

While we acknowledge the potential of PSEC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PSEC and that has a 100x upside potential, check out our report about the cheapest AI stock.

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Disclosure: None.