Small and mid-sized businesses are vital to the U.S. economy. The new administration is anticipated to back legislation that provides favorable conditions for small businesses. Support small businesses and generate 10%-plus yields with the BDC ETF.
Double-digit yielding stocks that also repurchase shares have plenty of inherent advantages. I share some dividend stocks that meet these criteria. I take a look at them to see if they are worth buying right now.
BIZD has a 30-Day SEC Yield of 10.29%, competitive in the market, with a positive 5+ year CAGR and an expense ratio of 0.44%. BDCs have proven to be a good hedge against S&P 500 contractions, maintaining strong margins even in restrictive credit conditions. BIZD is concentrated, with 76% in the top 10 holdings, but remains fairly priced (Grade D). A single-stock portfolio would be more efficient but harder to manage.
I continue to buy quality stocks like Pepsi and Waste Management, focusing on both income and growth, despite the market's high valuation. My portfolio strategy has evolved from being income-heavy with REITs and BDCs to a balanced approach including growth stocks that can deliver high single to double-digit growth. Pepsi, despite short-term headwinds, offers a 3.5% yield and is expected to deliver at least 5% growth annually, making it a solid investment.
High-yield dividend stocks can be powerful income machines, but can also be risky. This means that investors should use extra caution when investing in these sorts of stocks. We discuss two 14%+ yielding yields, one that is worth buying and one that is not.
The BDC sector has rebounded recently due to a plethora of good news. We expect the sector to continue to perform well moving forward. However, does that make 11%-yielding BIZD a Buy?
BDCs are currently exposed to multiple structural headwinds. It is very difficult to substantiate a bullish case for the BDC sector. In my view, to achieve alpha, one would have to go far out on the risk curve.
BDCs offer attractive opportunities for income investors to enhance their portfolio yields. Yet, since the yields are so enticing, the chances are high for getting caught in value traps. In the article I elaborate on two BDCs that are very close to cutting their dividends with a high probability of making the announcements in 2025.
My portfolio focuses on high-yielding stocks, as they are ideal components of an opportunistic capital recycling strategy. That said, not all high-yield stocks make for good investments. I share one stock with a dividend yield of over 13% that I would avoid right now.
I am bullish on BDCs and BIZD for 2025 due to a lower-rate environment, potential deregulation, and lower corporate taxes, which will drive growth. BIZD offers a diversified, high-yield income investment in BDCs, eliminating single stock risk and providing over 10% yield despite its 13.33% expense ratio. Investing in BIZD mitigates the complexities of researching individual BDCs, offering a consistent high dividend and exposure to top-performing BDCs like ARCC, FSK, and OBDC.
Hedge fund veteran and Wall Street-approved suit Scott Bessent is likely the new Treasury secretary. That's why this 11% dividend is a big winner.
The BDC universe is small, with less than 50 players, and only 4 have market cap levels exceeding $5 billion. Hence, retail and income-oriented investors can exploit high yields and market inefficiencies due to less competition from institutional "smart money". If, however, there is a willingness to enter the BDC universe via ETFs, there are only two meaningful options - BIZD and PBDC.