FSK - Fidus Investment: Dividend Is Covered With Large Margin Of Safety

2024-05-04 03:48:01 ET

Summary

• Fidus Investment is a strong performing Business Development Company (BDC) with high income and price appreciation.
• FDUS has outperformed many industry peers in terms of total return, likely due to its vulnerability to interest rates. I worry that once rates go down, FDUS will as well.
• FDUS focuses on lower middle market companies and has a diversified portfolio, with a majority of investments in 1st lien senior secured debt.
• The current dividend yield of 8.4% is well covered from the current NII.

Overview

When it comes to finding high yielding dividend stocks, there's no shortage of them within the Business Development Company category. Fidus Investment ( FDUS ) is one of the stronger performing BDCs within the space because it has provided both a high level of income as well as price appreciation. For such a strong BDC, I was surprised to find out that this company wasn't as popular and it didn't get as much coverage as some of its peers within the space. Perhaps this is because it's a much smaller BDC, having a market cap of only $627M....

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