No. of Recommendations: 5
April 22 issue. Title: A Smart Alternative to Junk Bonds. Google it to get past the registration block.

Thesis: This is like purchasing bonds in microenterprises, where you hire a manager to do the DD for you. The 8-10% distribution is more attractive than the junk bond rates, and some BDCs weathered the 2008 recession well.

First, an ETF: BIZD

Best bets:

Company/ticker, yield, Dividend coverage from stable cash flow (75% minimum, the higher the safer)

Ares Capital/ARCC 9.0 75%
Golub Capital/GBDC 8.0 77
Hercules Tech Growth/HTGC 8.4 86
New Mountain Fin/NMFC 9.8 97

Theses, according to the article:

ARCC: By far the largest cap. Rode out 2008-9 and "continued to pay healthy dividends.
GBDC: Shareholder friendly fee structure and particularly picky about risk (thus the lower distribution).
HTGC: Tech specialist, negotiates for stock warrants as part of its deals.
NMFC: Specializes in companies whose earnings hold up during recessions.

Comments welcome. I might take a small stake in one of these.

Kat
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