BDCs offering double-digit dividend yields are popular for high income seekers

From Nasdaq: 2024-10-08 08:07:00

Business development companies (BDCs) are gaining popularity due to high dividend income, much like REITs. BDCs provide capital to small, risky businesses through loans or stock purchases. This allows anyone to access private credit and potentially benefit from diversification and high dividends.

Morgan Stanley Direct Lending Fund (MSDL) offers a nearly double-digit dividend yield of 9.9% with 95% first-lien loans in its portfolio. First-lien debt takes top priority for repayment, reducing risk. The fund focuses on non-cyclical sectors and has maintained a dividend yield above 9% since 2021.

Blackstone Secured Lending Fund (BXSL) from the world’s largest alternative asset manager, Blackstone, boasts a forecasted dividend yield of 10.4% with 98.6% of its portfolio in first-lien debt. The fund has one of the lowest fees among public BDCs, boosting potential profitability and dividends.

FS KKR Capital (FSK) managed by KKR offers a forecasted dividend yield of 13.7%, down from 15% the previous year. The fund holds a riskier portfolio with only 58% in first-lien debt, and allocates 14% to asset-based finance, potentially leading to higher interest rates.

Overall, BDCs are becoming popular investment options for those seeking high dividend yields and exposure to private credit. Each fund offers different dividend yields and risk profiles, making them suitable for various investment strategies.



Read more at Nasdaq:: Top 3 Business Development Companies for Double-Digit Dividends