GBDC - Saratoga Investment Corp: Collect A 12.4% Yield With This BDC But Proceed With Caution

2024-04-20 06:30:00 ET

Summary

• Saratoga Investment Corp pays a large dividend yield currently, but investors should proceed with caution for reasons listed in this article.
• The company's portfolio is well-diversified, with most of their investments in Healthcare Software & IT Services.
• While the dividend coverage is currently strong, there are concerns about dilution and the company's leverage and portfolio quality due to their rise in non-accruals.
• SAR managed to beat on TII during Q3 earnings but saw their NAV decline for the fourth straight quarter, warranting the BDC to trade at a discount currently.

Introduction

Many readers and investors here on Seeking Alpha are probably experienced enough to remain cautious when they see a company paying large dividends at a cheap valuation. But what about those that don't know? I always think of that when constructing my articles. I was once that guy that chased yields and only looked at the surface and ignored the why. I think about those investors, but maybe it's the fact that I did 21 years in the military and in my job field I was used to taking care of younger sailors....

For further details see: