Investing in BDCs with Above-Average Dividend Growth: Ares Capital (ARCC), Fidus Investment Corp. (FDUS), Hercules Technology Growth Capital (HTGC) and Solar Capital (SLRC) Offer Dividend Growth Potential
67 WALL STREET, New York - June 21, 2013 - The Wall Street Transcript has just published its Business Development Companies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Consistent BDC Dividend Yield - BDC Risk/Reward Profile - Higher Dividend Yields - Business Development Companies Historical Overview
Companies include: Ares Capital Corporation (ARCC); Fidus Investment Corporation (FDUS); Hercules Technology Growth Capital (HTGC); Solar Capital Ltd. (SLRC) and many more.
In the following excerpt from the Business Development Companies Report, an expert analyst discusses the outlook for the sector for investors:
TWST: When we spoke before, one of the companies we talked about was Ares Capital, which you highlighted at the time as one of the companies you liked. Is that still one of the companies you have as a "buy"?
Mr. Plack: We still have Ares Capital (ARCC) at a "buy" rating. If you look at this group, historically the alpha in this space has been with companies that have had higher-than-average dividend growth or were some type of special situation or turnaround.
Our current favorites include stocks that offer above-average dividend growth potential, which is largely a function of available capital and an relative attractive valuation based on the dividend growth potential. Our three best ideas today include Fidus Investment Corp. (FDUS), Hercules Technology Growth Capital (HTGC) and Solar Capital (SLRC). We do like Ares, but these would be our best ideas right now.
TWST: And those are your best ideas because they meet those criteria that you just talked about?
Mr. Plack: Yes, again, they meet the criteria we are looking for, which includes above-average dividend growth and above-average potential yield based on that dividend growth. We believe Fidus, for example, has the potential to grow its dividend approximately 50%. If you look at the current stock price based on that higher level of dividend, you can get a potential current yield north of 12.5%.
TWST: Do all three of these companies lend in the same part of the middle market? Are they similar, or are they different types of companies?
Mr. Plack: These are three very different companies. Fidus invests at the lower end of the middle market, Solar invests at the...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
