3 Business Development Companies With Dividend Yields Over 8%

When it comes to investing for dividends, the strategies that are available in the market are numerous. They include investing for dividend growth, dividend safety, and the subject of this article, high current yield. Depending upon one’s goals, one of these may suit best, or in some cases, a combination of these strategies is best. As part of executing a strategy that involves seeking high yields, sector selection plays a big role. After all, technology and consumer discretionary stocks, for instance, tend to have low yields, so they’d be inappropriate. So where can investors turn for high current yields?

Business development companies offer generous yields because they’re required to distribute substantially all of their earnings to shareholders. BDCs receive favorable tax treatment, and in return, they aren’t allowed to retain earnings in the same way other companies are. That’s good for income investors because yields in the sector are routinely in the mid-single digits or better. Great Elm Capital (GECC) is a BDC that makes loans and middle market investments. Newtek Business Service (NEWT) provides financial and business services to small and medium-sized businesses in the U.S. Capital Southwest (CSWC) offers credit and private equity investments in middle market companies, but also invests in buyouts, recapitalizations and late venture-stage companies.

Source: InvestorPlace

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