When you take away the nuances, Gladstone Capital (NASDAQ: GLAD) is a corporate lender with a monthly dividend yielding almost 9% at recent prices. That may sound pretty enticing to income-oriented investors. The problem is that the nuances matter a great deal. Here is what you need to know before adding high-yielding Gladstone Capital to your portfolio.
Gladstone Capital is part of the Gladstone Management family, which also oversees a publicly traded real estate investment trust ( Gladstone Land ) and other assets. Thus, Gladstone Capital pays fees to its parent, Gladstone Management, which handles day-to-day operations. There are potential conflicts of interests in this arrangement, most notably that there are incentive structures in the fee arrangement that could lead management to make investments just to inflate its fees. This doesn't appear to be a big issue, but it is one that investors need to keep in mind here.
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For further details see:
Does Gladstone Capital Belong in Your Portfolio?