2024-07-08 08:42:44 ET
Summary
- Hercules Capital (HTGC) operates as a business development company that maintains a focus on life science and tech based companies.
- HTGC's high dividend yield of 7.5% and consistent dividend growth make it attractive for income investors.
- HTGC trades at a premium to NAV of over 82%, which is significantly above the 45% premium to NAV average.
- Interest rate cuts can have two possible outcomes that are dependent on one another. Therefore, I am remaining on the sidelines to observe how things play out.
- The distribution is well covered by the fund's net investment income.
Overview
I previously covered Hercules Capital ( HTGC ) back in March with my article titled: ' Trades At A Premium For A Reason '. I wanted to now update my outlook because this premium has grown to an absurd level! For some context, Hercules Capital operates as a business development company that focuses on making debt investments to venture backed companies within the technology space. Since the time of my last coverage, HTGC has provided a total return greater than 17% compared against the S&P 500's return of approximately 6%. Even on a YTD basis we can see that HTGC has absolutely crushed it in performance and returned nearly 34% including distributions.
The high yielding distribution is one of the most appealing parts of HTGC. The dividend yield currently sits at 7.5%. The recent dividend growth that it has experienced makes it an attractive candidate for any income investor's portfolio as it packs a large enough punch to provide a sizeable upfront dividend income stream but also has the ability to quickly compound this stream of income through increases and reinvestment....
Read the full article on Seeking Alpha
For further details see:
Hercules Capital: 2 Possible Outcomes (Rating Downgrade)