If you analyze high-yield BDC (Business Development Company) stocks and BDC related ETFs, many have come up in price since the “COVID stock market correction” but some BDC related stocks are still trading far below their 52-week highs yielding amazing income.
With the release of the vaccine coming, here are a few possible BDC related investments that should pay big income/dividends where many are still off their 52-week highs by more than 20%.
If you are looking for income plus some growth potential, here are some ideas. However, remember that every stock is priced based on income, revenue, costs, risk, default risk, balance sheet, and the political-legal environment.
Many people who are still in a high tax bracket may want to keep these stocks and ETFs in their 401(k) or IRA to avoid undue taxes, but some retirees may want to own these stocks outright just to have the ordinary income stream.
RISK NOTE: BDCs are considered a higher risk investment compared to a typical blue-chip stock.
TAX WARNING: Dividends from BDCs are generally taxed at the recipient’s tax rate for ordinary income. BDCs are generally high dividend yield securities and some capital appreciation potential. BDCs are regulated investment companies (RICs). A BDC Business Development Company must distribute over 90% of the profits to shareholders. A RIC regulated investment companies don’t pay corporate income tax on profits before they distribute income to shareholders. BDC may designate part of the year’s dividends as “return of capital,” which could be treated as a capital gain.
Disclaimer: Please consult with a licensed professional before making any important decision. Dividends are subject to change at any time. Dividend or income yield is projected and based on information from Yahoo Finance. For any of these positions, the writer either owns the position or is thinking about buying the position.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.
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