ARCC - Fidus Investment: Perfect BDC To Buy On A Pullback And Collect A Potential Double-Digit Yield

2024-05-09 07:00:00 ET

Summary

• Fidus Investment has performed well despite challenges faced by other BDCs as a result of higher interest rates.
• The company has shown solid growth year-over-year, with an increase in total portfolio value crossing the $1 billion mark.
• Fidus Investment has a low-leveraged balance sheet and strong dividend coverage, making it an attractive investment option on a pullback due to its current premium.
• The BDC is up double-digits in the past year, likely due to its shareholder-friendly management, awarding shareholders with special & supplemental dividends.

Introduction

It's no secret that Business Development Companies have done well over the last two years; seeing their share prices move upward as a result of higher interest rates and their predominantly floating rate portfolios. At the same time, however, some have seen their lenders face financial distress as a result of those same higher interest rates, making the macro environment a double-edged sword for BDCs....

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