In this piece, we will take a look at ten best BDC stocks to invest in.
Business Development Companies (BDCs) represent a compelling investment option for those looking to support smaller enterprises while earning a steady income through high dividend yields. BDCs operate as closed-end investment firms, specializing in providing much-needed capital to small and mid-size businesses that often face challenges accessing traditional sources of funding, such as bank loans or public equity markets. This unique business model allows BDCs to fill an essential gap in the financial ecosystem, supporting companies in various stages of development, including those undergoing turnarounds, experiencing financial distress, or poised for growth.
Established under the Investment Company Act of 1940, BDCs are required to meet specific regulatory standards, including maintaining registration with the Securities and Exchange Commission (SEC). What sets BDCs apart from private equity or venture capital firms is that they are publicly traded, giving regular investors access to an asset class that was once reserved for accredited or institutional investors. To qualify as a BDC, a company must allocate at least 70% of its assets to investments in privately-held or publicly-traded firms with market capitalizations below $250 million. This structure positions BDCs to invest in businesses that can benefit from their expertise and financial resources, generating returns for both the BDC and its investors.
One of the most attractive features of BDCs is their potential for generating income. Many BDCs offer dividend yields above 5%, with some even exceeding 10%. These high yields make them particularly appealing to income-focused investors. However, it’s important to approach BDC investments with careful due diligence, as high dividend yields can sometimes mask underlying financial issues. Investors need to ensure that a BDC’s portfolio and business fundamentals are strong enough to support consistent dividend payments without risking cuts in the future.
BDCs often rely on debt to finance their investments, which introduces leverage into their business models. This leverage can amplify returns during favorable economic conditions, allowing BDCs to maximize the value of their investments. However, leverage can also work against them during economic downturns, magnifying losses and putting pressure on their balance sheets. As a result, BDCs can be more volatile compared to other income-generating investments, particularly during periods of market turbulence.
Interest rates also play a significant role in the performance of BDCs. Since many BDCs borrow funds to invest, rising interest rates can increase their borrowing costs, potentially cutting into profits and reducing the overall returns to investors. Credit risk is another important factor to consider, as BDCs typically invest in smaller businesses that may be more vulnerable to financial instability or default. Analyzing the quality of a BDC’s portfolio and its risk management practices is crucial for investors looking to avoid excessive losses.
Tax considerations are another factor that makes BDCs unique. BDCs are required by law to distribute at least 90% of their taxable income to shareholders, which is why they often offer such high dividend yields. However, BDC dividends are not typically classified as “qualified dividends,” meaning they are taxed at ordinary income rates rather than the lower rates applicable to qualified dividends. For this reason, BDC investments may be better suited to tax-advantaged retirement accounts like IRAs or 401(k)s, where the tax impact can be minimized.
Despite these complexities, BDCs remain an attractive option for many investors, particularly those seeking high yields and exposure to a diverse range of smaller companies. For those willing to carefully evaluate the risks, BDCs offer the potential for both income and capital appreciation. In the following sections, we will highlight ten of the best BDC stocks to consider for your portfolio, analyzing their dividend yields, financial health, and overall investment potential. Whether you’re a seasoned income investor or new to BDCs, these stocks could provide valuable opportunities for steady returns in today’s market.
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Our Methodology
We sifted through online rankings and ETFs to come up with a preliminary list of 15 BDC stocks. We then examined Insider Monkey’s data on over 900 hedge funds, as of Q2 2024, and picked the 10 that were the most popular among elite hedge funds. The stocks are sorted in ascending order of the number of hedge funds that have stakes in them.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. PennantPark Investment Corporation (NYSE:PNNT)
Number of Hedge Fund Holders: 4
PennantPark Investment Corporation (NYSE:PNNT) stands out as a compelling business development company (BDC) for investors. As a BDC, PennantPark Investment Corporation (NYSE:PNNT) specializes in providing mezzanine debt, senior secured loans, and equity investments to middle-market companies. The company’s portfolio spans diverse industries, including technology, healthcare, energy, and transportation, making it a key player in the private equity space. The stock is a promising candidate for inclusion in a list of top BDC stocks due to its diversified investment approach and focus on sectors poised for growth.
From a financial standpoint, PennantPark Investment Corporation (NYSE:PNNT) fundamentals paint a solid picture. In its Q3 2024 earnings call, the company reported GAAP net investment income (NII) of $0.24 per share, demonstrating its consistent ability to generate income from its investments. Core NII came in at $0.21 per share. Although there was a 2.2% decrease in NAV to $7.52 per share, this was primarily due to valuation adjustments on nonaccrual loans, which were partially offset by increases in equity investments. The company has consistently rewarded its shareholders with strong dividend payouts. For the quarter ended June 30, 2024, PennantPark Investment Corporation (NYSE:PNNT) issued a special dividend of $2.5 million from its joint venture (JV) portfolio. This highlights the company’s ability to not only generate income but also share it with investors. With a dividend yield of around 12%, PennantPark offers a lucrative income stream for shareholders, making it particularly appealing for income-focused investors.
PennantPark Investment Corporation (NYSE:PNNT) portfolio also boasts strong credit statistics. The weighted average yield on its debt investments was 12.7%, and the portfolio is composed of 56% first-lien secured debt. The company’s disciplined approach to investment, with a weighted average loan-to-value of 50% and interest coverage ratio of 2.0x, reflects its conservative strategy in managing risk while maximizing returns.
Overall, PennantPark Investment Corporation (NYSE:PNNT) is well-positioned for future growth, with a diversified portfolio, robust dividend yield, and strong investment metrics. Its focus on middle-market companies and strategic capital deployment makes it an attractive option for those seeking to invest in BDC stocks.
09. BlackRock TCP Capital Corp. (NASDAQ:TCPC)
Number of Hedge Fund Holders: 5
BlackRock TCP Capital Corp. (NASDAQ:TCPC) stands out as a strong option in the Business Development Company (BDC) sector, specializing in direct equity and debt investments across a wide range of industries. As a BDC, the company focuses on providing financial support to middle-market and small businesses, typically through debt securities, senior secured loans, mezzanine financing, and equity investments. Its diversified portfolio spans industries such as telecommunications, healthcare, technology, and energy, making it a well-rounded investment option in the BDC space.
One of the key highlights of BlackRock TCP Capital Corp. (NASDAQ:TCPC) is its focus on generating steady income for its investors, underpinned by its impressive dividend yield. For the second quarter of 2024, the company reported an adjusted net investment income (NII) of $0.38 per share, and its Board declared a third-quarter dividend of $0.34 per share. With a dividend yield exceeding 10%, BlackRock TCP Capital Corp. (NASDAQ:TCPC) demonstrates strong coverage, reflecting a disciplined approach to maintaining dividend stability. Over its 12-year history, the company has consistently covered its dividends with recurring NII, often paying special dividends as well.
In terms of financial performance, BlackRock TCP Capital Corp. (NASDAQ:TCPC) maintained a return on average equity of 14%, at the higher end of its historical range. The company successfully raised $325 million in fixed-rate unsecured debt at an attractive interest rate of 6.95%, showcasing its ability to capitalize on favorable market conditions. The company’s net leverage ratio of 1.13x is well within its target range, ensuring sufficient liquidity to navigate market volatility.
Despite challenges in the second quarter, such as a temporary increase in non-accrual status for certain portfolio companies, the overall portfolio health remains solid. The management’s active engagement with these companies to restructure their balance sheets suggests a path to recovery. With a focus on senior secured loans, which make up 91% of its portfolio, BlackRock TCP Capital Corp. (NASDAQ:TCPC) is well-positioned to continue delivering stable returns to its investors.
08. Trinity Capital Inc. (NASDAQ:TRIN)
Number of Hedge Fund Holders: 5
Trinity Capital Inc. (NASDAQ:TRIN) is a noteworthy addition to any list of the best business development company (BDC) stocks to invest in. As a BDC, Trinity Capital Inc. (NASDAQ:TRIN) specializes in venture debt, primarily providing loans and equipment financing to growth-stage companies, with a focus on innovative sectors like medical devices and tech. Established in 2019, Trinity Capital Inc. (NASDAQ:TRIN) has quickly built a strong portfolio and presence in the venture capital market. This Phoenix-based company aims to generate consistent income for its investors, which it achieves through a combination of term loans and equity-related investments.
In its Q2 2024 earnings call, Trinity Capital Inc. (NASDAQ:TRIN) reported a record investment income of $54.6 million, a substantial 18.7% year-over-year increase, demonstrating the platform’s growth potential. Trinity’s effective portfolio yield stood at 16%, a strong indicator of the company’s robust performance. The firm also recorded a net asset value (NAV) of $680 million, up from $626 million in the previous quarter, reflecting sound portfolio management and asset growth. The company declared a cash dividend of $0.51 per share for the 18th consecutive quarter, reinforcing its commitment to shareholder returns. Trinity’s dividend yield is particularly attractive, providing a steady income stream to investors seeking both yield and growth potential in their portfolios.
Despite missing earnings expectations with an EPS of $0.506 (versus an expected $0.53), Trinity Capital Inc. (NASDAQ:TRIN) strong fundamentals make it a compelling choice. The company’s ability to maintain a high return on equity (ROE) of 16.3% and a return on average assets (ROAA) of 7.4% underscores its operational efficiency. Additionally, the firm’s diversification into five distinct business verticals, including tech lending and life sciences, offers a broad range of opportunities and reduces reliance on any single sector.
Trinity Capital Inc. (NASDAQ:TRIN) commitment to growth is evident through its strategic expansion into Europe and strong capital raising efforts. With a sound portfolio structure, impressive dividend yield, and a commitment to scaling its business, Trinity remains a solid investment for those looking for high-quality BDC stocks.
07. TriplePoint Venture Growth BDC Corp. (NYSE:TPVG)
Number of Hedge Fund Holders: 7
TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) is a standout among business development companies (BDCs) due to its focus on growth-stage, venture-backed companies. Specializing in debt financing and equity investments, TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) provides customized financing solutions, including growth capital loans, secured loans, and equipment financing to companies in high-growth sectors such as technology, life sciences, and e-commerce. These sectors are known for their rapid expansion and innovation, making TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) well-positioned to capture lucrative opportunities in venture lending.
In its Q2 2024 earnings, TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) reported strong financial metrics, underpinned by significant growth in its investment portfolio. New debt commitments surged by 420% compared to the previous quarter, and funding activity grew by 186%, reflecting robust demand for venture debt financing. The company’s selective investment approach has led to a well-diversified portfolio, spread across high-potential industries like fintech, cybersecurity, and software. This strategic allocation enhances the company’s ability to generate solid returns, which are further supported by its equity positions and warrants in 94 portfolio companies. These warrant and equity positions bode well for long-term net asset value (NAV) appreciation, providing a significant upside for investors.
The company offers a quarterly dividend of $0.30 per share, which reflects a strong alignment with its earnings power and core portfolio yield. Even after a reduction from previous levels, this dividend remains attractive, especially in the current market environment where income-seeking investors value stable payouts. TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) focus on maintaining its dividend while prudently managing its leverage and liquidity makes it a compelling choice for dividend-focused investors.
Additionally, the company’s leverage ratio has improved significantly, dropping from 1.76x to 1.15x, indicating stronger financial health. TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) management has also reduced unfunded commitments from $205 million to $71 million, further strengthening its liquidity position. These moves not only provide flexibility for future investments but also enhance the company’s resilience in uncertain market conditions. Overall, TriplePoint Venture Growth BDC Corp. (NYSE:TPVG) strong fundamentals, attractive dividend yield, and strategic positioning in venture growth financing make it a solid pick for investors looking for exposure to BDC stocks.
06. Oaktree Specialty Lending Corporation (NASDAQ:OCSL)
Number of Hedge Fund Holders: 9
Oaktree Specialty Lending Corporation (NASDAQ:OCSL) stands out as a solid business development company (BDC) stock, making it a key candidate for inclusion in the article 10 Best BDC Stocks To Invest In. The company specializes in providing capital to small and mid-sized businesses across a variety of industries, making it a valuable player in the middle market lending space. Oaktree Specialty Lending Corporation (NASDAQ:OCSL) investment approach focuses on first and second lien debt, mezzanine loans, and equity investments, providing a diversified portfolio that balances risk and reward. Its exposure to industries like healthcare, technology, and consumer services strengthens its potential for stable returns, especially in an uncertain economic environment.
Despite missing earnings expectations in Q3 2024, with a reported EPS of $0.55 compared to the expected $0.57, Oaktree Specialty Lending Corporation (NASDAQ:OCSL) remains fundamentally strong. The company’s net asset value (NAV) per share fell slightly to $18.19, down from $18.72 in the previous quarter, primarily due to markdowns in non-accrual investments. However, OCSL continues to perform well, with its portfolio showing a significant focus on first lien debt investments, now accounting for 82% of the portfolio. This strategic shift towards senior secured debt is aimed at reducing risk while maintaining solid returns.
Oaktree Specialty Lending Corporation (NASDAQ:OCSL) offers a robust dividend yield, a key metric for income-focused investors. The company declared a quarterly dividend of $0.55 per share, which remains consistent with the previous quarter. This dividend, coupled with the company’s management fee reductions, reflects OCSL’s commitment to delivering value to shareholders. The fee reduction is expected to increase annual adjusted net investment income by approximately $12 million or $0.15 per share, further enhancing Oaktree Specialty Lending Corporation (NASDAQ:OCSL) attractiveness as a BDC stock.
Additionally, Oaktree Specialty Lending Corporation (NASDAQ:OCSL) maintains a healthy liquidity position, with $828 million available on credit facilities and $96 million in cash at the end of Q3. With a solid leverage ratio of 1.1 times and continuous strong origination activity, OCSL remains well-positioned to navigate market volatility and capitalize on new investment opportunities.
Alphyn Capital Management stated the following regarding Oaktree Specialty Lending Corporation (NASDAQ:OCSL) in its first quarter 2024 investor letter:
“Oaktree Specialty Lending Corporation (NASDAQ:OCSL): We previously owned the company but exited after Brookfield acquired its parent, Oaktree, and redeployed the capital at the top of the ownership stack in Brookfield. I reinvested in the fourth quarter of last year, given the attractive yield of 11% in the current high interest rate environment, approximately double that of treasuries, but not double the risk in my view.
OCSL’s $3 billion portfolio consists primarily of fixed income investments across 146 companies, with a strong focus on senior debt (78% first lien, up from 54% when Oaktree first took over management of the portfolio) and a flexible mandate that allows them to invest in liquid credit markets and secondaries, enabling them to capitalize on market dislocations. As part of the Oaktree group, it benefits from access to the parent’s extensive syndication platform, credit expertise, and resources to manage and work out the occasional loan delinquency.”
05. Hercules Capital, Inc. (NYSE:HTGC)
Number of Hedge Fund Holders: 11
Hercules Capital, Inc. (NYSE:HTGC) stands out as a prime candidate for inclusion in the top BDC stocks due to its robust performance and strategic positioning within the business development company (BDC) sector. Specializing in providing venture debt and growth capital, Hercules Capital, Inc. (NYSE:HTGC) focuses on privately held, venture-backed companies at various stages of development. Its expertise extends across technology, SaaS finance, energy tech, and life sciences, making it a versatile and dynamic player in the market.
For Q2 2024, Hercules Capital reported impressive earnings, aligning with market expectations. The company achieved earnings per share of $0.51, matching analyst forecasts. Notably, Hercules Capital, Inc. (NYSE:HTGC) set a record for total gross fundings in the first half of 2024, reaching $1.07 billion—surpassing $1 billion for the first time in its history. This significant milestone underscores the firm’s strong origination capabilities and leadership in the venture lending space.
The company’s performance metrics reflect its financial health and operational efficiency. Hercules Capital, Inc. (NYSE:HTGC) generated a record total investment income of $125 million in Q2 2024, up nearly 8% from the previous year. Net investment income also saw a notable increase, reaching $82.4 million or $0.51 per share. The firm’s net asset value per share stood at $11.43, and it achieved a return on equity of 19.2%. Despite a slight dip in core yield to 13.7% from 14%, Hercules Capital’s focus on high-quality assets and conservative leverage continues to support its growth and stability.
A key highlight for investors is Hercules Capital, Inc. (NYSE:HTGC) strong dividend yield. The company’s base distribution of $0.40 per share was comfortably covered by net investment income, with coverage at 128%. This solid dividend performance enhances its attractiveness to income-focused investors, reinforcing its position as a reliable and rewarding BDC stock. In summary, Hercules Capital, Inc. (NYSE:HTGC) strategic investments, robust financial metrics, and impressive dividend yield make it a standout choice for investors looking to capitalize on opportunities within the BDC sector.
04. FS KKR Capital Corp. (NYSE:FSK)
Number of Hedge Fund Holders: 13
FS KKR Capital Corp. (NYSE:FSK) emerges as a standout choice among business development companies (BDCs) due to its strategic focus on providing tailored credit solutions to private middle-market U.S. companies. The firm specializes in senior secured and subordinated debt investments, often combining these with equity interests like warrants or options. This approach allows FS KKR Capital to cater to a diverse range of middle-market firms, enhancing its potential for high returns.
For Q2 2024, FS KKR Capital Corp. (NYSE:FSK) reported net investment income of $0.77 per share and adjusted net investment income of $0.75 per share, both of which surpassed market expectations. The company’s portfolio continued to perform well, with a substantial $2.7 billion in investments originated during the first half of the year. Notably, its liquidity position remains strong, with approximately $4.7 billion available as of the end of the quarter.
The firm’s investment strategy includes a focus on senior secured loans, with 58% of its portfolio comprised of first lien loans and 66% in senior secured debt. This conservative approach helps mitigate risk while maintaining substantial exposure to high-quality assets. FS KKR Capital Corp. (NYSE:FSK) portfolio also includes investments in asset-based finance and corporate bonds, providing a well-rounded investment approach. The company declared a third-quarter distribution of $0.70 per share, which includes a base distribution of $0.64 and a supplemental distribution of $0.06. With a projected total distribution of $2.90 per share for 2024, this equates to a compelling yield of approximately 15% based on the recent share price and a 12.1% yield on the net asset value of $23.95 per share. This robust yield underscores FS KKR Capital’s commitment to delivering substantial returns to its shareholders.
Looking forward, FS KKR Capital Corp. (NYSE:FSK) is well-positioned to continue its strong performance despite a competitive lending environment and potential interest rate adjustments by the Fed. The firm’s solid investment income, significant liquidity, and high dividend yield make it a noteworthy addition to any BDC-focused investment portfolio.
03. Ares Capital Corporation (NASDAQ:ARCC)
Number of Hedge Fund Holders: 16
Ares Capital Corporation (NASDAQ:ARCC) stands out as a leading choice among Business Development Companies (BDCs) due to its comprehensive approach to providing capital and its consistent track record of delivering strong financial performance. As a BDC, Ares Capital specializes in investing in middle-market companies across various sectors including manufacturing, healthcare, and technology. Its diversified investment strategy, which includes acquisition, recapitalization, and mezzanine debt, positions it well to capitalize on evolving market opportunities. The company’s robust investment platform and strategic regional focus enhance its ability to generate attractive returns and provide capital solutions across a broad spectrum of industries.
In the second quarter of 2024, Ares Capital Corporation exceeded earnings expectations, reporting core earnings per share (EPS) of $0.61, surpassing the anticipated $0.58. This represents a 5% increase year-over-year, underscoring the company’s solid performance amidst a competitive market. The positive financial results were driven by a favorable investment environment, healthy credit performance, and a significant increase in deal flow. The company achieved a record net asset value (NAV) per share of $19.61, reflecting a 6% year-over-year growth.
Ares Capital Corporation (NASDAQ:ARCC) financial metrics highlight its strong position in the market. The company’s portfolio at fair value grew to $25 billion, up from $23 billion in the previous quarter, showcasing its active investment strategy. The weighted average yield on its debt and income-producing securities remained stable at 12.2%, with an overall yield on investments at 11.1%. This demonstrates the company’s ability to maintain high returns on its investments despite market fluctuations. The company declared a quarterly dividend of $0.48 per share, marking its 15th consecutive year of stable or increasing dividends. This yield is supported by a strong taxable income spillover, estimated at $635 million or $1.05 per share for 2024, providing further stability and visibility for investors.
In summary, Ares Capital Corporation (NASDAQ:ARCC) impressive financial performance, strategic investment approach, and robust dividend yield make it a compelling addition to any portfolio focused on BDC stocks. Its consistent ability to deliver strong returns and maintain a high dividend yield underscores its appeal as a top investment choice in the BDC sector.
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.
01. Blue Owl Capital Corporation (NYSE:OBDC)
Number of Hedge Fund Holders: 21
Blue Owl Capital Corporation (NYSE:OBDC) stands out as a prime candidate for inclusion in our list of ten best BDC stocks to invest in due to its robust investment strategy, impressive financial metrics, and attractive dividend yield. As a distinguished business development company (BDC), Blue Owl Capital specializes in a diverse range of direct and fund-of-fund investments. This includes senior secured, direct lending, and unsecured loans, as well as subordinated and mezzanine loans. Additionally, the company explores equity-related securities such as warrants and preferred stocks, and engages in various forms of preferred equity investments, unitranche, first lien, and second lien term loans. Blue Owl Capital Corporation (NYSE:OBDC) focuses on investing in middle-market and upper-middle-market companies across the United States, targeting firms with annual EBITDA ranging from $10 million to $250 million or annual revenues between $50 million and $2.5 billion.
Blue Owl Capital Corporation (NYSE:OBDC) recent Q2 2024 earnings report highlights its compelling fundamentals and investment appeal. The company reported a net investment income (NII) of $0.48 per share, reflecting a slight increase from the previous quarter, driven by strategic capital deployment and strong portfolio performance. With a net asset value (NAV) per share of $15.36, Blue Owl Capital Corporation (NYSE:OBDC) has consistently delivered a strong annualized return on equity (ROE) of 12.6%. This performance underscores the company’s effective management and the resilience of its investment portfolio. For Q2 2024, Blue Owl Capital Corporation (NYSE:OBDC) declared total dividends of $0.43 per share, which includes a regular dividend of $0.37 and a supplemental dividend of $0.06. This results in an attractive annualized dividend yield of over 11%, marking the sixth consecutive quarter of double-digit yields. This high dividend yield is a testament to Blue Owl Capital Corporation (NYSE:OBDC) robust earnings capabilities and its commitment to returning value to shareholders.
The company’s strategic merger with Blue Owl Capital Corporation III (OBDE) is poised to enhance its scale and diversification. The merger, expected to close in early 2025, will significantly increase Blue Owl Capital Corporation (NYSE:OBDC) portfolio size to approximately $17.7 billion, making it the second-largest publicly traded BDC by total assets. This consolidation is anticipated to improve liquidity, reduce costs, and provide better access to capital, further solidifying OBDC’s market position. Overall, Blue Owl Capital Corporation (NYSE:OBDC) strong financial metrics, impressive dividend yield, and strategic growth initiatives make it a compelling choice for investors seeking exposure to high-quality BDC stocks.
While we acknowledge the potential of OBDC to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OBDC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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