Buy These 7-8% Yields In May And Go Away

Market Overview - The market is currently experiencing all-time highs, with the Dow surpassing 40,000 and the S&P 500 reaching over 5,300, making a typical market selloff in May less likely [2] - Despite the market conditions, there are still opportunities for value investors to find undervalued stocks [2] Hercules Capital (HTGC) - Hercules Capital offers an 8.3% yield and focuses on venture debt investments in tech and life sciences [4][11] - The investment portfolio is conservative, with 93% in senior secured loans, providing a strong position for principal recovery in case of defaults [5] - HTGC's Core Yield is 14.0%, significantly above the 11.1% from early 2022, and the company has seen a 14.7% increase in assets under management to $4.5 billion [7][8] - The company achieved$605 million in gross fundings in Q1 2024, the highest in its history, and maintains a low non-accrual rate of 0.1% [8][9] - HTGC's NAV per share improved to $11.63, and the company has a conservative debt-to-equity ratio of 0.94x [9][11] - The current price of HTGC is$19.36, with a Price-to-NAV of 1.67x, indicating it is trading at a premium [12] Broadstone Net Lease (BNL) - Broadstone Net Lease provides a 7.4% yield and focuses on single-tenant commercial real estate with a diversified portfolio [14] - The portfolio includes 54% industrial properties, with a high occupancy rate of 99.2% and a long average lease term of 10.6 years [15] - BNL reported a 5.9% YoY growth in AFFO per share to 0.36, driven by rent escalators and lower G&A costs [16] - The company sold 37 properties for 252 million, which will support future investments in high-quality industrial properties [17] - Management increased its AFFO per share guidance to $1.42, with expectations of significant investment volume for the year [18] - BNL has a strong balance sheet with a net debt to EBITDA ratio of 4.8x, supporting its 7.4$15.69, with a forward P/FFO of 10.6, which is below its peers [21] Investment Summary - Both Hercules Capital and Broadstone Net Lease present attractive investment opportunities characterized by strong dividend yields and conservative financial management [22] - HTGC's focus on high-yield, floating-rate venture debt complements BNL's diversified portfolio of long-term net-leased commercial properties, providing a balanced approach to income generation [23]