Does This 16.5% Yielder Deserve an Upgrade?

For income investors just starting out, one of the most important things to keep in mind is that a high dividend yield isn’t always a sign of strength. For instance, a high-yield company could reduce its payout, but if its stock price also drops (which is often the case after a dividend cut), its yield could remain at a high level. And investors who bought the stock before the cut not only have to accept a smaller income stream from reduced dividends, but often have to live with a lower market price of their investment.

And that’s why I was hesitant to write about Oxford Lane Capital Corp (NASDAQ:OXLC)—until now, that is. No doubt, Oxford Lane Capital Corp is hands down one of the highest-yielding names in today’s market. With an annualized dividend rate of $1.62 per share, the company offers a jaw-dropping yield of 16.5%. However, it wasn’t always sunshine and rainbows at this Greenwich, Connecticut-based business development company. In early 2017, Oxford Lane slashed its quarterly dividend rate from $0.60 per share to $0.40 per share, representing a cut of 33.3%.

Source: Income Investors

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