ARCC - Prospect Capital Is Interesting Yielding 11.69% And Trading At A Discount To Its Peers
2024-01-24 09:00:00 ET
Summary
- Business Development Corporations offer high yields for income investors.
- Prospect Capital Corporation has shown strong performance and growth in net investment income.
- PSEC offers a double-digit yield and is undervalued compared to its peer group.
Unless you're a dividend investor, Business Development Corporations (BDCs) probably aren't that interesting. For investors who need to generate income from their capital, BDCs have some of the largest yields that can be found in the market. It's a new year, and we're approaching the time when BDCs will start reporting earnings. I believe BDCs will do well in 2024 because I don't think the Fed will cut as much as the market is pricing in. Based on Jerome Powell's last conference, the Fed foresees roughly 3 cuts at 25 bps each, which would leave rates at an enticing level for another year for BDCs to originate additional loans. Anything can happen in the market, but it looks like Prospect Capital Corporation ( PSEC ) shares have formed a bottom as they rebounded by more than 20% since the end of October. I still find PSEC to be interesting for income investors as it supports a double-digit yield while trading at a discount of more than 30% of its net asset value ((NAV))....
Prospect Capital Is Interesting, Yielding 11.69% And Trading At A Discount To Its Peers