- When the pandemic hit last year this higher yield sector took a huge pricing hit with dividend yields soaring to 30% to 40%.
- The average dividend yield among business Development Companies ("BDCs") was around 20% for most of March 2020.
- I was actively making purchases during this volatility as I have identified the BDCs that will outperform during an economic downturn.
- Clearly, the market was expecting dividend cuts that never came for most higher-quality BDCs and some have recently been increasing regular distributions and/or paying supplemental dividends.
- BDCs are still yielding 10% but that will likely come down as investors realize the strength and resilience of this sector to outperform during economic challenges.
For further details see:
Growing Dividends During A Pandemic: Oaktree