HRZN - Horizon Technology Finance: 11.4% Yield Is Safe But Proceed With Caution

2024-05-20 07:00:00 ET

Summary

• Horizon Technology Finance's recent earnings show declining financials and a deteriorating risk profile, warranting caution for investors in search of higher yields.
• The BDC's double-digit yield is currently covered by net investment income, but declining NAV and unrealized losses are concerns.
• The stock trades at a 20% premium to its NAV, making it less attractive compared to other high-yielding BDCs that I consider higher quality.
• HRZN's dividend is safe for the near term as the company has ample liquidity in the form of spillover income.

Introduction

I'm sure most of us are very familiar with those "Proceed with Caution" signs that are usually posted at businesses or work sites. When looking into any investment, especially those with higher yields, one should be very careful. Higher-yielding companies are great income generators, but investors should do their due diligence before placing their hard-earned money into a holding....

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