As I see it there are three ways to retire. You can save up all the money you'll need and live off of it. You can have a cash flow that pays you enough to live off of. Or, you can have a combination of these. PSEC is a great cash flow stream for thousands of people. Lets say over your lifetime you accumulate 45000 shares of PSEC through purchasing and drip. At today's divi you'd get $4950 a month. For most, that alone is enough to live on. But then you add social security, pension, 401k and your set. PSEC is a big part of my retirement plan.
Sentiment: Strong Buy
There is no free lunch. Investors should always take risk into account. I bought PSEC and it has been a dud for me so far. However, it is part of an extremely diversified portfolio. PSEC is not a safe investment; it is speculative. It can always blow up in a bad economy; more so than many other alternatives even in spite of the Harvard educated executives running it. Hopefully, it is near the low, Still a lot of uncertainty and I don't feel great having my relatively small amount of money here. Too many cheerleaders on this board for my taste.
stockmarketadvantage: Nothing says you have to hold your small position in PSEC nor participate on this board. It's free choice you know. Everyone invests to his or her risk tolerance. My 10k shares are small potatoes to some other claimed positions on this board but as you, it's only a small part of my very diversified portfolio, and, as long holder, I can afford to hold for a long, long time as they're paying me to wait for the price to recover.
Good luck with this approach tex, but watch out - first, there's the old saying about diversification - no more than 4-5% in any one investment. Second, an outfit like PSEC is way, way out on the risk curve. Unless you plan on having a $10MM portfolio, having over $4MM in a single risk filled investment like PSEC would put you in danger. Third, outfits like PSEC don't last for long in the scheme of things - unlike Coke or P&G, ATT, etc... - or they don't last long in the same incarnation, paying such huge dividends.
Capital markets change and their business plan will change. Once interest rates normalize, to the point where the institutions decide they want to loan money, this whole model of PSEC's might be in jeopardy. Dividends could be structurally reset downward or even suspended. Who knows when? Certainly well within the lifetime you are talking about; whereas Coke, ATT and P&G will still be around squeezing out dividends when everyone now alive and their grandchildren are all dead and gone..
Keep in mind what these guys do, in a nutshell: They borrow money (or/and sell stock) to loan money to lower than junk rated companies that have few alternatives - then think about how many things have to go right, forever, for this to be a sustainable for a lifetime and what things could go wrong and set things back 20, 30% - or more - in an eye blink,
I'm long the stock and net neutral on the price below $10 via November puts owned.
I have the FRIP option with Scottrade, as much as I like the high yield from PSEC I redirect it into BP, GE, VZ and HE. I've never seen a good thing last forever but as long as I can exit PSEC at $8 I'm happy to use it to build up income from other stocks.
Get it straight whiskey tango. The structure of this company passes along the internal rate of return to the owners (us) way more efficiently than coke and the others you mentioned. It really isnt a dividend at all we are actually treated like the owners of the company. Like REITS they are taxes like income not dividends.
I am trying to convince myself of this having just started with 10K shares and watched PSEC for a year waiting for a good entry point. I wish I could trust anybody enough to put 60% of my funds into but I would be very happy with 5k a month. I missed NYMT a couple times, but i still make money from my business so I don't pay quite enough attention. "Never miss a bill but always pay attention first".
60% of your funds??!!?? Never. Diversify. There are plenty of great companies out there paying nice yields over 7% with a lot less risk than PSEC. No problem mixing in some nice high flyer yields like PSEC but the risk should be spread around. JMHO. I have about 20 positions in my portfolio, none over 7%. I sleep well at night.
10,000 shares, enjoy your $1100 per moth divi. You have to do what your comfortable with. Don't trust anyone to control your money better than you, after all it's YOUR money. Make sure to always use stops in any stock, you'll sleep a little better knowing if the worst happens you want lose everything. I like PSEC because looking back they have a proven track record. BDCL is also something I'm in as well, but not as heavy as PSEC because there's not enough history to make me feel comfortable.
Sentiment: Strong Buy
I have been retired over 9yrs and live exclusively off investment income, mostly private loans, rentals and an annuity. I own PSEC and other dividend payers but don't need the extra income so reinvest. I prefer to not have all my investments in the financial markets. To be honest, I think I would have been better off going into more growth stocks since I don't need the income. You don't want more income than you need cause the tax man wants his cut.
I love hearing from current retirees, because they are where I'm going and I can learn from them. I've thought about rental properties as well, but when I run the numbers it doesn't look as appealing to me. Let say I have $250,000 cash to buy a home and rent it out. I could get around $2500 a month in the Dallas area. But instead I take the $250,000 cash and drop it in PSEC. That gets me $25000 shares paying a $2750 per month divi. And there is no messing with renters, maintenance etc. Yes, it's risky being in the market, PSEC included but I can control my losses using stop loss orders.