LRFC - Logan Ridge Finance: A Small-Cap BDC Worth Considering For Income Generation

2024-06-27 11:00:33 ET

Summary

• Logan Ridge Finance Corp. is a BDC focusing on lower middle-market companies, delivering solid earnings growth and increasing dividend payouts for five consecutive quarters.
• LRFC's portfolio quality is solid, with a decent first-lien exposure and improving balance sheet, but faces credit quality risks due to smaller size and rising non-accruals.
• Despite their potential, I currently rate LRFC a hold due to credit quality risks. Additionally, I would wait to see growth in net investment income before buying.
• However, they do trade at a 34% discount to NAV, a potential attractive investment opportunity for risk tolerant investors.

Introduction

As income investors, we all have stocks that we favor as a result of their strong income generation. Altria ( MO ) and Capital Southwest ( CSWC ) are a couple that come to mind when I think of companies that generate great income for their shareholders....

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