This Alternative Bank Pays Investors a Jaw-Dropping Yield of 11.4%

The thing is, though, while banks are still immensely profitable today, most of them don’t offer much to income investors. Looking around, it would be difficult to find a bank stock with a yield of six percent. However, that doesn’t mean investors should give up on the sector completely. In particular, I’m looking at a company that’s a bit different from a traditional bank but is still in the lending business. And what’s more, it offers a double-digit dividend yield.

The company in question is Stellus Capital Investment Corp (NYSE:SCM), a closed-end investment company headquartered in Houston, Texas. I consider Stellus Capital to be an “alternative bank” because it doesn’t give out loans to consumers like you and me. Instead, the company specializes in lending to a particular segment of the economy: middle-market businesses.You see, middle-market companies usually generate annual earnings before interest, taxes, depreciation, and amortization (EBITDA) of between $5.0 million and $50.0 million. However, because of their smaller presence than the large and established corporations, big banks don’t usually lend to them. So they have to pay higher financings costs to get loans from alternative banks like Stellus Capital.

Source: Income Investors

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