SAR - Saratoga Investment Corp: Solid BDC But Lacks NAV Growth

2024-05-16 09:59:44 ET

Summary

• Saratoga Investment Corp is a business development company that focuses on middle-market companies and offers a high starting dividend yield of 12.5%.
• SAR currently trades at a discount to NAV of 13%, which may make this an opportune time for entry.
• The credit quality of SAR's investments remains solid, but non-accruals sit at 1.7% of fair value.

Overview

As an investor that loves collecting dividend income, I am always on the hunt for opportunities to capture high yields and large total returns. Business Development Companies have been a great place to get both of these things, as they typically have high starting yields and are highly attractive in an environment of elevated interest rates. In a perfect world, a BDC will be able to provide both an increasing share price over time and an increasing distribution as the portfolio grows more profitable....

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