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: BIZDBest 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 77Hercules Tech Growth/HTGC 8.4 86New Mountain Fin/NMFC 9.8 97Theses, 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
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra