11% Yield, Benefits From Rising Rates, 28% Dividend Growth

Many companies will see their interest expenses rise, but the ones whose management was savvy enough to lock in debt at fixed rates should do just fine. Moreover, companies whose income is tied to floating rates should do even better. Such is the case with certain BDC's. this BDC yields 10.67%, plus 4% for its trailing supplemental dividends. It will benefit from rising interest rates - its net income/share is set to increase as rates increase. It has strong 1.29X dividend coverage.

is an internally managed BDC specializing in credit and private equity and venture capital investments in lower and middle market companies with EBITDA between $3M and $20M, and leverage of 2X to 4X Debt/EBITDA through CSWC's debt position. 98% of CSWC's income is tied to floating rates, while only 38% of its liabilities are floating rate securities. Management estimates that a 75 basis point hike, like the one that the Fed just did, will add ~$.15 in annual NII/share, while a 150 basis point hike will ad ~$.33/share annually. With the Fed for another hike at its next meeting, we could to 150 basis points sooner than later.

Source: Seeking Alpha

Related Articles:

- Stocks That Have Paid Uninterrupted Dividends Since 1895

- The Magnificent Marvelous Money Machine

- International Securities For A Diversified Income Portfolio

- Rising Dividends = Rising Returns

- 4 Higher-Yielding Consumer Stocks With A History of Rising Dividends