10 Best BDC Stocks To Invest In

02. Golub Capital BDC, Inc. (NASDAQ:GBDC)

Number of Hedge Fund Holders: 18

Golub Capital BDC, Inc. (NASDAQ:GBDC) is a compelling addition to the portfolio of top business development companies (BDCs) due to its robust performance metrics and shareholder-focused strategies. As an externally managed, non-diversified investment management company, GBDC specializes in providing first lien senior secured loans to middle-market companies, primarily those supported by private equity sponsors. Its diversified investment portfolio spans consumer services, healthcare, IT, and more, mainly within the U.S. market.

In its Q3 2024 earnings report, Golub Capital BDC, Inc. (NASDAQ:GBDC) demonstrated strong fundamental performance. The company’s net asset value (NAV) per share increased by 1.3% to $15.32, reflecting the successful integration of its recent merger with GBDC 3. This strategic move not only bolstered the NAV but also reduced the incentive fee rate from 20% to 15%, enhancing GBDC’s future earnings potential. Additionally, the company’s adjusted net investment income (NII) per share rose to $0.48, marking a 9% year-over-year increase. This increase is attributable to a strong origination volume of $435 million, a notable uptick from the previous year.

However, Golub Capital BDC, Inc. (NASDAQ:GBDC) did face challenges during the quarter, including negative outcomes in two investments—Imperial Optical and Pluralsight—that led to a $0.17 per share loss. Despite these setbacks, GBDC’s overall credit performance remained solid, with a low non-accrual rate of just 1%, which is well below the industry average. The company’s investments are predominantly in first-lien senior secured loans, which provide substantial downside protection due to their seniority in the capital structure. The company declared a total distribution of $0.44 per share, comprising a regular quarterly distribution and a supplemental distribution, which equates to an annualized dividend yield of 11.5%. This yield is notably higher than many peers in the BDC sector, demonstrating Golub Capital BDC, Inc. (NASDAQ:GBDC) commitment to delivering substantial returns to its shareholders.

Overall, Golub Capital BDC, Inc. (NASDAQ:GBDC) offers a solid blend of strong financial performance, strategic growth initiatives, and attractive shareholder returns, making it a top pick among BDC stocks. Its focus on first-lien senior secured loans and robust dividend yield further enhance its appeal for investors seeking stability and income in the business development sector.