Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The company advocates for a balanced approach to investing, focusing on high-quality dividend stocks that provide long-term growth potential and reliable income [1]. - The strategy aims to create a portfolio that not only generates income but also captures total returns in line with the S&P 500 index [1].

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds like the S&P 500 [1]. Investment Strategy - The company advocates for a balanced approach to investing, focusing on high-quality dividend stocks that provide long-term growth potential and reliable income [1]. - The strategy aims to create a robust investment portfolio that not only generates income but also captures total returns that align with market benchmarks [1].

The way how BDCs (business development companies) make their money boils down to borrowing as cheap as possible in order to have capital that could be lent to relatively high-risk companies at much higher yields. This results in a spread, which can be enhancedRoberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latv ...

Core Insights - Business Development Companies (BDCs) are publicly-traded firms that lend to small businesses and are mandated to return at least 90% of taxable income to shareholders as dividends [3][4] - BDCs offer high yields, with some providing returns up to nearly 13% [2] - The article highlights three specific BDCs that are trading below their net asset value (NAV) while offering substantial dividends [3] BDC Overview - BDCs were created by Congress to serve as new lenders to small businesses, similar to Real Estate Investment Trusts (REITs) [3] - They are characterized by their requirement to distribute a significant portion of their income as dividends, making them attractive for income-focused investors [3] High-Yield BDC 1: BlackRock TCP Capital Corp. (TCPC) - TCPC focuses on middle-market companies with enterprise values between $100 million and $1.5 billion and has a diverse portfolio of 146 companies [4] - The investment mix is primarily in first-lien debt (83%), with 94% of its debt being floating-rate [5] - TCPC has faced challenges, including a recent dividend cut and a high level of non-accrual loans at 12.6% [10][9] High-Yield BDC 2: Crescent Capital BDC (CCAP) - CCAP is associated with Crescent Capital Group and invests in 191 portfolio companies, primarily in first-lien debt (91%) [11][12] - The company has a complex dividend history, with recent changes in special dividends and a focus on undistributed taxable income [13][14] - CCAP is currently trading at a 23% discount to NAV, with an 11% yield on the base dividend [16] High-Yield BDC 3: PennantPark Floating Rate Capital (PFLT) - PFLT targets midsized companies with annual EBITDA between $10 million and $50 million and has a portfolio of 190 companies [17][18] - Approximately 90% of PFLT's portfolio consists of floating-rate first-lien debt [19] - The company pays monthly dividends with a yield of nearly 12%, but its dividend coverage is tight, with a 97% payout ratio [21][20]

Core Viewpoint - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other asset classes like Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Group 1: Investment Strategy - A solid base of classic dividend growth stocks can be complemented with other investment vehicles to create a diversified portfolio [1]. - The hybrid system aims to balance growth and income, allowing investors to capture total returns on par with the S&P 500 [1]. Group 2: Investment Focus - The focus is on uncovering high-quality dividend stocks that offer potential for long-term growth and significant income generation [1]. - The strategy includes a mix of different asset types to boost overall investment performance [1].