The Bottom For This 9% Yielding BDC Is In

Investors are paying ~10.9x Q1-16 run-rate adjusted NII for the BDC. An investment in this company comes with a 9.18 percent dividend. Stocks often tumble when the company announces a dividend cut, and that's especially true when it comes to high-yield income investments whose value is defined by the dividend the stock throws off over time. If a company with a high-yield security in fact slashes its payout, it rarely goes down well. The company decided to slash its dividend payout by 17 percent in May on the back of compressing yields for its debt investments.

I am calling the bottom for business development company Triangle Capital Corporation (NYSE:TCAP). If you aren't following business development companies much these days, here is what happened: Triangle Capital is a BDC lending money to lower middle-market companies with revenues ranging from $20 million to $200 million and EBITDAs ranging from $3 million to $35 million. Since BDCs pay out most of their earnings to shareholders, Triangle Capital is a high-yield income vehicle.

Source: Seeking Alpha

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