Business Development Companies
BDCs are famous for their unreliable dividends, but if I could show you a stock with 10% yield and at 72% of its book value, would you find it attractive? Prospect Capital (PSEC) is one such example - it has a 13.1% yield and 0.72 price-to-book value ratio!
There are a few other BDCs in this category - high yield, below book value price. For example, Ares Capital (ARCC) - 10.1% yield, Fifth Street Finance (FSC) - 11.5% yield, and Triangle Capital (TCAP) - 12.3% yield.
Caution: your due diligence should include work that look into these BDCs' investment portfolios so you can assess those companies' risks.
In our next blog post, we will focus on the third 10% yield area - Oil Bonds.