What is BDC Buzz?
BDC Buzz is devoted to helping members build a solid portfolio of publicly traded business development companies (BDCs) that currently yield between 6% and 11% annually (see chart below). For more information regarding BDCs please see BDC Buzz’s interview on Forbes from May 7, 2021:
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What Can I Expect Each Week From BDC Buzz?
The following is an outline of what you can expect each week as we provide a balance between easy-to-digest general information to make timely trading decisions supported by the detail in the Deep Dive Projection reports (for each BDC) for subscribers who are building BDC portfolios.
Weekly BDC Sector Update - Before the markets open Monday morning we provide quick updates for the sector including significant events for each of the companies that we follow along with upcoming earnings, reporting, and ex-dividend dates. Also, we provide a list of the best-priced opportunities along with oversold/overbought conditions, what to look for in the coming week, and any other meaningful economic events that need to be considered for the sector.
Deep Dive Projection Reports - Detailed reports on 2 to 3 BDCs per week prioritized by focusing on ‘buying opportunities’ as well as potential issues such as changes in portfolio credit quality and/or dividend coverage (usually related). This should help subscribers create a shopping list ready for the next general market pullback. We look for portfolio updates that might be mentioned in the SEC filings as well as news feeds for the private portfolio company investments.
Comparison or BDC Investment-Grade Bond Reports – A series of updates comparing expense/return ratios, leverage, Baby Bonds, and portfolio mix, with discussions of impacts to dividend coverage and risk.
Access - We are available weekdays during market hours via email for any and all questions or concerns.
Suggested BDC Portfolios - Ranging from risk-averse to total return to high-yield. BDC Buzz also shares his personal positions so you can see where he is putting his money. The following are the current yields for each portfolio:
Risk-Averse - Typically yields between 8.5% to 10.0% for investors focused on capital preservation (especially during a recession) and seeking less volatility along with solid dividends.
Total Return - Typically yields between 9.5% to 11.0% for longer-term investors focused on tax-adjusted returns from dependable regular dividends and the potential for special dividends as well as long-term capital appreciation from increased stock values.
Recommended Higher Yield - Typically yields between 10.0% to 12.0% mostly with BDCs have reached a fully ramped dividend (Level 2) and are focused on portfolio maintenance. We will be making changes to this portfolio mostly based on pricing and updated projections.
High-Yield - Typically yields between 12.0% to 14.0% for investors willing to take on more risk with less capital appreciation (over the long-term), but with higher dividend yields, higher price volatility, and the potential for higher returns depending on investment timing.
What Is a Business Development Company?
A business development company invests money in privately owned, small- and medium-sized companies. BDCs aim to generate income and capital gains when the companies they invest in are sold, much like venture capital or private equity funds. Anyone can invest in BDCs as they are public companies, traded on major stock exchanges.
Advantages of BDC Investing
In addition to their higher-than-average dividend yields, BDCs come with many advantages:
Access to private companies. You get access to private market investments, which can otherwise be unavailable or hard to access for regular investors.
Enhanced liquidity. Even if retail investors find a way to buy into private companies, they face another problem: Getting their money out. Publicly traded BDCs give you excellent liquidity, and you avoid locking your money up for extended periods.
More transparency. As highly regulated public companies, BDCs are required by law to provide their investors with extensive information about their financial health. Private companies aren’t required to tell their direct investors much of anything about their finances. This can help you ensure your capital is being spent wisely.
