High-Yield BDC Stock Pays 11.3%, 30% Discount From NAV, Buy Territory

Sell-off in the high-yield sector is a good opportunity to buy this BDC. Shares currently sell for a 30 percent discount to NAV. Reward-to-risk combination, entry yield, and margin of safety have all improved in the last two, three weeks. Dividend should be sustainable over the short haul. An investment in the stock throws off an 11.3 percent dividend.

Prospect Capital Corp.'s (PSEC) shares are close to re-entering "buy territory." Thanks to the recent stock sell-off in the high-yield sector, the business development company has a vastly enhanced reward-to-risk ratio. At today's price point, income investors get a covered yield, and they benefit from a comfortable margin of safety as Prospect Capital's shares again sell for just 70 cents on the dollar. I consider the dividend to be reasonably safe over the next twelve months. An investment in Prospect Capital comes with an 11.3 percent covered dividend.

Source: Seeking Alpha

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