| High dividend yields from BDCs |
| Wednesday, September 26, 2007 |
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“Business development companies provide mezzanine financing, generally to smaller companies. One of our holdings in this sector is American Capital (NASDAQ: ACAS). "The company has an aggressive business model with high growth, but has a strong balance sheet and solid fundamentals. Indeed, the stock was recently added to the S&P 500) and its European Capital subsidiary recently went public in London, boosting the parent’s value. Its current yield is 9% and the firm has ‘huge confidence’ in its dividend. “Gladstone Capital (NASDAQ: GLAD) has an extremely conservative management; the company is run by chairman David Gladstone. This has meant slow growth, but also a strong balance sheet and portfolio. As such, Gladstone Capital is able to take advantage of opportunities if overall market declines. The stock has a current yield of 8%. “Gladstone Investment (NASDAQ: GAIN) has the same management, and as a new company it is even less leveraged with arguably greater growth potential. The BDC has a current yield of 7.3%.” |
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