Forbes·2025-10-21 13:45Core Insights - Business Development Companies (BDCs) have become increasingly popular due to their high dividend yields, often exceeding 12.9% [3][4] - BDCs serve as crucial financing sources for middle-market companies that are too large for local banks but too small for major institutional investors [4] - Caution is advised when investing in BDCs, particularly those with sector concentration or high management fees [5][6] BDC Performance and Risks - TriplePoint Venture Growth BDC Corp. (TPVG) has a yield of 16.6% but has seen a total return decline of 15% this year, despite the tech sector's overall increase of over 21% [6][7] - Goldman Sachs BDC (GSBD) has underperformed the S&P 500 and charges high management fees, totaling approximately 3.9% on $1.5 billion in assets [8][9] - GSBD's investment income for the first half of 2025 was $94.1 million, yielding a 12.4% annualized return, which is insufficient to fully cover its 12.9% dividend yield [12][13] Alternative Investment Options - The Columbia Seligman Premium Technology Growth Fund (STK) has outperformed both the S&P 500 and GSBD, offering a stable 5% dividend that has never been cut [15] - STK is currently trading at a 5.3% discount to its net asset value, presenting a buying opportunity for investors [16] - Compared to BDCs, STK offers fewer risks and potentially higher returns, making it a compelling alternative for income-focused investors [17]