This 9.5%-Yielding BDC Is Worth Buying

I bought this BDC for my income portfolio in April. The company has strong underwriting practices reflected in low non-accruals, and a debt investment portfolio that accentuates capital preservation. In addition, it has interest rate upside thanks to a large representation of floating-rate debt in its investment portfolio. The company has maintained its dividend rate throughout the credit cycle. Shares currently sell for about net asset value. An investment in the stock yields 9.5 percent.

I have added business development company Ares Capital Corp. (ARCC), one of the largest BDCs in the country, to my high-yield income portfolio at the end of last month. The business development company has paid a stable dividend for years, and about covers its payout with net investment income. The portfolio consists largely of relatively secure first and second lien debt, which should provide income investors with some downside protection in the event of a recession. Shares are selling for about net asset value. An investment in Ares Capital Corp. currently yields 9.5 percent.

Source: Seeking Alpha

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