12% Dividend Yield, Nice Upside

Core Insights - The article focuses on high-yield stocks, particularly Business Development Companies (BDCs), and highlights several included in the VanEck BDC Income ETF (BIZD) [1][3] BDC Holdings - The top three holdings in the BIZD ETF include Ares Capital Corp. (ARCC), Blue Owl Capital Corp. (OBDC), and Main Street Capital Corp. (MAIN), with respective holdings of 16.58%, 10.27%, and 8.81% [2] - Other notable BDCs mentioned include Hercules Capital Inc. (Hercules), Golub Capital BDC Inc. (GBDC), and Blackstone Secured Lending Fund (EXST) [2] Market Trends - BDCs have experienced a significant decline in share prices recently, with an average drop of 7% to 9% in under a month, which is unusual for this sector [20][22] - The overall sector values have decreased by approximately 4% to 7% for the year [22] Dividend Outlook - Most BDCs have not yet cut dividends, but reductions are anticipated due to a sharp decrease in short-term interest rates, which will likely lower net interest income [5][7] - The BIZD ETF and recent picks yield around 12% based on trailing dividend rates [7] Investment Strategy - A recent position was initiated in Blackstone Secured Lending Fund (BXSL), which has seen a significant price drop, making it more attractive for investment [8][9] - BXSL has historically protected its Net Asset Value (NAV), which has increased by approximately 5% since early 2022, indicating strong management performance [16] Valuation Metrics - BXSL is currently trading at a price-to-NAV ratio of 0.95, below its historical average of 1.06 to 1.07, suggesting potential upside if it recovers to previous valuation levels [14][15] - The article emphasizes the importance of comparing price-to-trailing NAV and book value (BV) to assess valuations across BDCs [27][26]