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....
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Saratoga Investment Corp: Collect A 12.4% Yield With This BDC, But Proceed With Caution