The direct lending model for mid-sized companies in the US has long been one of the most attractive dividend strategies outside of traditional equity sectors. This is where returns are generated that are not dependent on consumption growth, technology cycles or stock market sentiment, but on interest rates, the quality of the loan portfolio and discipline in capital allocation.
At the same time, it is not a risk-free dividend machine. The high yield is bought by cyclicality, sensitivity to credit quality and the fact that the dividend is always directly tied to how much the company actually earns in BDC structures. That's why it's important to go much deeper than just the current dividend yield with this type of title.
Top points of analysis
A monthly dividend yielding around 13% puts the title among the highest yielding income stocks in the market.
BDC's business model allows for a direct link to interest rates and generates regular cash flow.
The portfolio of over $1 billion is spread…