Uncle Sam’s Favorite BDCs (with 9% to 10% Yields)

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Uncle Sam’s Favorite BDCs (with 9% to 10% Yields)

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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These 10%+ Dividends Will Get Chopped in 2018

I usually write about the beauty of closed-end funds (CEFs) and how we can tap them for yields of 7% or more while also beating the S&P 500 index.

Today I want to talk about the dogs of the CEF world.

And there are plenty of dogs to talk about—they’ll kill your returns while promising big income streams that aren’t what they seem.

It’s a shame, because a lot of these rotten CEFs attract first-level investors who don’t look beyond the dividend yield. As a result, these folks often get buyer’s remorse when they discover those big dividends were actually hiding a grim—and riskier—reality.…
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3 BDCs Paying Up to 13%, Trading for 71+ Cents on the Dollar

There’s been a mini-wave of insider buying in the BDC (business development company) sector. This is worthy of our attention for two reasons:

  1. These firms pay fat yields (we’ll discuss 3 paying up to 13%),
  2. Their stocks are trading below book value.

This means we can buy these firms for as low as 71 on the dollar and get their dividend streams (and future cash flows) for free. (Remember when I told you to buy four big bank stocks when they were trading below book? If you followed my advice 18 months ago, you made a lot of money).

We’ll analyze each of these “pennies on the dollar” BDCs in a minute.…
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Warning: These 18% Dividends Are a Trap Ready to Spring

If you’re a dividend fan and you spot an 18% yield, you’re going to sit up and take notice.

But your radar will also probably go up for another reason: you know outsized payouts like that pretty much always come with outsized risk too.

Which brings me to the weird funds I’m going to show you today.

Their 18% average yield masks something shocking: they’re not only dangerous but they’re not even income investments! They’re something else entirely—and if you fail to pick up on that and buy, they could blow a hole in your retirement portfolio.

Let me explain, starting with…

Where We Found These 18% Payouts

The funds I’m talking about are called exchange-traded notes (ETNs), a close cousin of exchange-traded funds (ETFs), another asset class I recommended staying clear of in a September 12 article.…
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3 High-Yielding BDCs: 2 Duds, 1 Stud

Many investors mistakenly believe that the world of private equity and its home-run potential are hopelessly out of reach. Privately held PE firms are difficult to access and often require seven-figure sums to start. Plus the handful of publicly traded PE companies are organized as limited partnerships – which means a hassle come tax time.

But there’s a promising group of easy-to-buy private equity firms hiding in plain sight: business development companies (BDCs).

And BDCs are dividend behemoths. In fact, I’ll highlight three today paying up to 9%!

Business development companies are the lifeblood of American small business, providing financing to small and mid-sized business in many instances when banks and other financiers consider the risk to be too great.…
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Three BDCs Paying 12% to 16%: 1 to Buy, 2 to Sell

Most business development companies (BDCs) have low profiles on Wall Street. Their relative obscurity makes them good vehicles for banking high yields – in fact, today we’ll discuss three that pay between 12% and 16% annually.

BDCs invest in small- and midsize businesses, the building blocks of entrepreneurial America. They were created by the government in the 1980s to help grow up-and-coming companies in a bid to stimulate business and create jobs. They provide debt, equity and other forms of financing to businesses that larger banks and investment firms shy away from.

They’re also income machines by law.

Their regulated structures require them to dole out 90% or more of their taxable income to shareholders in the form of dividends.…
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