9% Yield, 18% Discount, Monthly Payer

We've covered several Business Development Companies, known as BDCs, in our articles. BDCs offer retail investors exposure to privately-held firms, which often are funded by venture capital firms. This BDC yields 8.96%, with coverage rising to 1.17X in Q2 '21, and averaging 1.5X during the past four quarters. It's trading at an -18% discount to NAV/share, much lower than the BDC industry average. Management declared steady monthly dividends through October.

Founded in 2004, NY-based Prospect Capital (PSEC) provides private debt and private equity to middle-market companies in the United States with a focus on sponsor-backed transactions and direct lending to established owner-operated companies. PSEC invests primarily in first-lien and second-lien senior loans and mezzanine debt, which in some cases include an equity component. It provides capital to middle-market companies and private equity financial sponsors for refinancings, leveraged buyouts, acquisitions, recapitalizations, later-stage growth investments, and capital expenditures.

Source: Seeking Alpha

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