Forget ZIRP: Top 10 Big Yields (BDCs, CEFs And REITs)
Blue Harbinger | Sep 01, 2019 07:07AM ET
Over the last year, interest rate expectations have gone from expected rate hikes by the Fed to rate cuts, and it’s got people scared and confused. Increasingly confounding to many, rates in many regions around the world are now negative. According to Wikipedia, a Zero Interest Rate Policy (ZIRP) is for extraordinary circumstances. But let’s forget ZIRP for a moment, and instead consider attractive big yield opportunities for income-focused investors. This article focuses on Business Development Companies (BDCs), Closed-End Funds (CEFs) and Real Estate Investment Trusts (REITs). Specifically, we count down our Top 10 Big Yields from those categories. Without further ado, here’s our Top 10.
New Residential Investment Corp (NYSE:NRZ) is a big dividend REIT that invests in mortgage-related assets, and the shares have sold off very sharply in recent weeks, mainly because its previously coveted Mortgage Servicing Rights (“MSR”) assets actually decrease in value when interest rates decline.We have previously written in great detail about New Residential and how it makes money (for example NRZ Trade
h2 9. Ares Capital (ARCC), Yield: 8.5%/h2Ares Capital Corporation (NASDAQ:ARCC), part of the $142 billion Ares Management, L.P. is the largest BDC in the US by assets. The company holds a well-diversified, low risk portfolio of assets and has provided sustained income to investors since its IPO in 2004. We believe the company’s 8.5% dividend yield is reasonable (for example, within the historical range) and the stock presents an attractive risk reward opportunity given ARCC’s stable and consistent income generation. You can read our full ARCC report here….
Get The News You Want
ARCC Report
h2 8. Royce Global Value Trust Inc (NYSE:RGT), Yield 8.4%/h2If you like to generate high income from your investments, this disciplined small cap CEF yields 8.4% and it is currently attractive in multiple ways. For example, its discount to NAV, its well-seasoned management team, its attractive style tilt, its US economy-focus, its impressive long-term track record, its long-term total return potential, and its ability to help you diversify away from the traditional high income sectors (where so many income investors have over concentrated their risks), all while using great discipline to pay you the steady high income payments you need. If you’re managing your own investments, this CEF can be an attractive addition to your diversified, long-term, high-income-focused, investment portfolio.Also interesting to note, Michael Burry (of “The Big Short” fame) believes there are attractive small cap value opportunities in the market now due to a large cap ETF bubble. According to RVT Report
h2 7. Main Street Capital Corporation (NYSE:MAIN), Yield 5.6%/h2If you’re looking for an attractive way to generate stable income and an interesting way to participate in the lower middle-market, then Houston based BDC Main Street Capital (MAIN) is worth considering. It delivers a consistently growing dividend per share, under average debt to equity and above average ROE and ROA, and it has significant oppurtunities for continuied NAV growth per share. You can access our Main Street report here…
Main Street Report
h2 6. Saratoga Investments (SAR), Yield 8.7%/h2Saratoga Investment Corp (NYSE:SAR) is a diversified, business development company and a CLO manager that has experienced strong portfolio and dividend growth over the last several years. In particular, it manages a growth oriented portfolio and offers an attractive dividend yield. Plus, given the dry powder available to the company as well as potential for additional funding from SBIC program, SAR is well positioned to grow its dividend and earnings while continuing to maintain strong dividend coverage. You can access our full SAR report here…
Saratoga Report
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.