Fidus Investment Corp (FDUS), Hercules Technology Growth Capital (HTGC) and Solar Capital Ltd. (SLRC) have above-average dividend growth and above-average potential yield based on their dividend growth, leading to potential double-digit returns, says Vernon C. Plack, Director of Research and Senior Analyst at BB&T Capital Markets.
“If you look at this group, historically the alpha in this space has been with companies that have had higher-than-average dividend growth or were some type of special situation or turnaround. Our current favorites include stocks that offer above-average dividend growth potential, which is largely a function of available capital and an relative attractive valuation based on the dividend growth potential. Our three best ideas today include Fidus Investment Corp., Hercules Technology Growth Capital and Solar Capital,” Plack said.
FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE.
All three business development companies have different strategies, investing at ends of the market, but Plack says their high-yield potential makes these his favorite picks among BDCs, even when he has “buy” ratings on other stocks.
“These are three very different companies. Fidus invests at the lower end of the middle market, Solar invests at the upper end of the middle market, and Hercules lends to companies that are primarily backed by venture capital firms. So these are three very different stories that lend to very different types of companies, even though they are all structured as business development companies,” Plack said.
BDCs Ares Capital (ARCC), Fidus (FDUS) and THL Credit (TCRD) Show Above-average Dividend Growth
January 02, 2013
Fidus Investment Corp (FDUS) Brings Liquidity Up to $125 Million with Second SBIC License
June 27, 2013
Ares (NASDAQ:ARCC), Oaktree (NYSE:OAK-A), and Hercules (NYSE:HTGC) are the Three Top BDC Picks from Jefferies
August 13, 2020
Solar Capital Ltd. (SLRC) Strengthens Balance Sheet by Accessing Longer-Term Capital
April 05, 2013
Luxfer Holdings PLC (LXFR) Goes Public, Sees Over 20% Return on Capital and Above-Average Growth Prospects
April 19, 2013
