BDCs as the “New Bonds,” with Yields Up to 9.1%, But Are They Safe?

Our Archive

Search completed

BDCs as the “New Bonds,” with Yields Up to 9.1%, But Are They Safe?

If you want to live off dividends in retirement, you can’t depend on “blue-chip stocks.” They simply haven’t paid enough yield for years:

Even High-Yield Savings Accounts Start to Look Good at These Levels

Source: Multpl.com

The S&P 500’s yield recently hit 1.7%. Think about it in “retirement spending” terms. If you took an entire million-dollar nest egg and put it in the S&P 500, you’d be looking at just $17,000 in dividend income per year. If you have even less to invest, like $500,000, that’s just $8,500 a year—several thousands of dollars below the U.S. Department of Health & Human Services’ poverty guideline of $12,760!… Read more

Read More

17 Monthly Dividends That Pay $2,629 Per Month

Mortgage payments. Car payments. Cell-phone bills. Power bills. Water bills. Credit card bills.

What do they all have in common?

Nobody likes them, of course. But more importantly, they all arrive relentlessly month after month.

That’s fine when you have a normal job that pays you every couple of weeks or every month. But that regular bill routine becomes considerably more daunting once you hit retirement, when much of your regular income is coming from your portfolio of dividend paying stocks … which pay out every quarter, not every month.

Investors in turn often build complicated dividend calendars that get knocked out of whack whenever they ever have to cut back on certain stocks.… Read more

Read More

This 12.1% Payout is Trash (But This 6.3% Yield is Safe, With Upside)

Most income investors find their way to business development companies (BDCs) by screening or searching for big yields. And there’s no doubt these listed payouts do appear impressive! Here are the five largest BDCs (ranked by assets under management):

A first-level look at this table may have you wondering why anyone would buy MAIN when they could nearly double their dividend by choosing another ticker. Well, there’s a good reason that we’ll get to in a minute. First, let’s talk about what BDCs actually do so that we can understand what is driving these big dividends.

It all started in 1940, when Congress passed the Investment Company Act.… Read more

Read More

10 Dividend Stocks That Will Double Your Money

Is it possible to double your money – quickly – buying safe dividend stocks? You bet. Let me explain how…

“Basic” income investors are enamored with higher current yields. These are OK for payouts today, but they’re not going to get us 100%+ gains.

For triple-digit profits we must pay attention to the underrated dividend hike. These raises not only increase the yield on your initial investment, but they trigger stock price increases, too.

For example, if a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long.…
Read more

Read More

Collect $3,333 in Monthly Dividends on Just $500,000 for Life

Most investors with $500,000 in their portfolios think they don’t have enough money to retire on.

They do – they just need to do two things with their “buy and hope” portfolios to turn them into $3,333 monthly income streams:

  1. Sell everything – including the 2%, 3% and even 4% payers that simply don’t yield enough to matter. And,
  2. Buy my 8 favorite monthly dividend payers.

The result? $3,333 in monthly income every month (from an average 8% annual yield, paid every 30 days). With upside on your initial $500,000 to boot!

Traditional dividend stocks simply can’t keep up. Let’s take a 4-pack of popular dividend aristocrats to map how much they’ll pay investors through summer.…
Read more

Read More

3 BDCs Yielding 6%-12%: 1 Buy, 1 Wait, 1 RUN!

Business development companies (BDCs) are one of the market’s top sources of yield. Unfortunately for income hunters, in 2017, this industry also was one of Wall Street’s greatest sources of disappointment.

I don’t say that to condemn the BDC space. I say that as a warning: While these financiers of small and midsize businesses can occasionally be excellent long-term holdings, there are plenty of landmines to avoid. That’s why today, I want to highlight three such funds that have mouthwatering yields of up to 12% – each of which might look attractive at first glance, but only one of which looks like a safe buy right now.…
Read more

Read More

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.…
Read more

Read More

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.…
Read more

Read More

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.…
Read more

Read More

Categories