BDCs can be an excellent source of high income, but they are not the holy grail that some investors believe. The group faces mounting pressures as well as categorical drawbacks (that are often overlooked). In this report, we share updated data on over 35 big-yield BDCs, review our concerns with the group, highlight 3 top BDCs that standout as attractive, and then conclude with a few alternative high-income opportunities that are currently worth considering too.
*New Trade: Sold Owl Rock (Now Blue Owl), Purchased This BDC Instead, 11.2% Yield
This is a quick note to let readers know we have placed a new trade in our Blue Harbinger High Income NOW and Income Equity portfolios. Specifically, we have sold 100% of our position in Owl Rock Capital (ORCC) (recently renamed Blue Owl, (OBDC)) and replaced it with this (see below) highly attractive 11.2% yield BDC instead. We’ll be updating our portfolio tracker sheets shortly, but wanted to share this information with readers right away.
Big-Yield BDC: Why This 11.2% Yielder May Be Set For Gains Ahead
Business Development Companies (BDCs) are another income-investor favorite thanks to their very large dividends and potential for price gains. In this report, we review an attractive BDC that has positioned itself for solid performance ahead (i.e. potential dividend and price increases). We review the business, the market, the dividend safety, valuation and risks, and then conclude with our opinion on investing.
A Rare 8% Yield BDC Offering Dividend Growth, Equity Upside: Oaktree Specialty Lending
While other business development companies (“BDCs”) were cutting their dividends as a result of the pandemic, Oaktree Specialty Lending Corp (OCSL) not only maintained theirs, but has also significantly increased it in each of the past five quarters. Moreover, the shares are trading at an attractive price relative to net asset value (“NAV”). In this report, we review the health of the business, the highly-experienced management team, its balance sheet, liquidity, dividend safety, valuation and risks. We conclude with our opinion on investing.
7.7% Yield: A Rare BDC Offering Dividend Growth, Equity Upside
While other business development companies (“BDCs”) were cutting their dividends as a result of the pandemic, the big-dividend payer we review in this report not only maintained theirs, but has also significantly increased it in each of the past four quarters. Moreover, the shares are trading at an attractive discount to net asset value (“NAV”). In this report, we review the health of the business, the highly-experienced management team, its balance sheet, liquidity, dividend safety, valuation and risks. We conclude with our opinion on investing.