2 BDCs to Buy Now and An 11% Payer to Avoid at All Costs

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Do you want to generate income that increases along with interest rates, with the potential upside from private equity investments? A Business Development Company (BDC), a type of closed-end investment company, could be the answer you’re looking for.

BDCs were created by the U.S. Congress back in 1980, as a way to help small- and mid-size businesses grow. They invest in debt and/or equity and often provide operational assistance to the internal management team. Similar to real estate investment trusts (REITs), a BDC distributes at least 90% of its profits as dividends.

It’s the dividends that really make BDCs stand out in this rising interest rate environment, especially since trading volatility has spiked of late.… Read more

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When most investors hear about a momentum stock, they expect to see a chart with multiple zig-zagging trend lines. However, I believe the trend can also be your friend with fundamental data and help individuals find potential winning investments.

Price momentum is important for traders looking to make a quick hit in days or weeks, but fundamental momentum can help investors generate a steady and growing amount of dividend income over a period of years.

The key for any stock that pays a dividend is the underlying profit that supports the payout each period. Investors have historically rewarded companies that consistently exceed (or surprise) expectations and higher earnings can lead to higher future dividends.…
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Business development companies (BDCs) are the kings of yield right now, and it’s not even close. As I write, the average yield in the space is 9.5%, and more than half of all publicly traded BDCs boast a yield in the double digits.

That’s thanks to a long drubbing among these companies – but for the first time in a while, things are starting to look up in this high-yield arena. And right now, I have my eye on three glimmers of hope in the space that are throwing off 9% to 10% dividends.

2017 was a downright dreadful year for BDCs, which managed to even underperform bonds despite their high yields.…
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Many investors think they need to choose between current income and price upside. They don’t.

In a moment, I’ll highlight five stocks paying between 8% and 10% with 40% upside to boot.

Let’s face it – growth matters. It’s the best way to retire on a nest egg of just $500,000:

How to Stretch Your Investment on $500,000

The table above assumes a nest egg of half a million dollars that yields 8% a year, and absolutely no dividend reinvestment – here, you’re putting every cent of income into your pocket. Look how much that $500,000 expands over just a few years as you’re able to achieve more capital gains out of it. Even if you’re conservative and want to assume just 4% in annual growth out of your portfolio, that’s an extra $240,000 after 10 years – a much better position to be in than if you settled for a no-growth portfolio by selecting subpar high yielders …
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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