|Business Development Companies (BDC's)
(Exchange Traded Debt and Preferreds of BDC's Listed Below Also)
A Business Development Company (BDC) is a public corporation that invests in
small to mid sized companies. They may invest in either debt or equity of the given
company. For all practical purposes buying shares in a BDC is like being a venture
capitalist or a private equity investor.
Typically the BDC is looking to invest in a company that will grow rapidly and
profitably. Obviously the idea is to grow the investment
Not unlike a REIT the BDC, generally organized as a Regulated Investment
Company (RIC) must pay out 90% of their taxable income each year to their
investors. The BDC organized as a RIC must also own no more than 10% of any
companies voting securities and may not invest more than 5% of the BDC's assets in
any one security.
BDC's range in size from tens of millions of dollars which they invest to many billions
Because of the requirement that the BDC must pay out 90% of their taxable
earnings each year these companies typically pay a sizable dividend (either Monthly
As you can see below in the chart the yields are many times large--although like all
yields--bigger is not always better. High yield normally means high risk. One must
research BDC's just as they would any company to determine if the risk/reward
equation is appropriate for your situation.
|The Yield Hunter
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In our 7th Year
Clicking on the security description will bring you to the BCD's website
where you can continue your research.
|Yield Shown Represents Current (most recent) Distribution
Extrapolated to 4 quarters. Special dividends are NOT included.
NOTE--we now include the last 2 distributions so one can see
the trend (we will add another quarter in the next 3 months)