When it comes to investing for dividends, the strategies that are available in the market are numerous. They include investing for dividend growth, dividend safety, and the subject of this article, high current yield. Depending upon one’s goals, one of these may suit best, or in some cases, a combination of these strategies is best.
Business development companies offer generous yields because they’re required to distribute substantially all of their earnings to shareholders. BDCs receive favorable tax treatment, and in return, they aren’t allowed to retain earnings in the same way other companies are. That’s good for income investors because yields in the sector are routinely in the mid-single digits or better.
In this article, we’ll take a look at three BDCs we like today with high dividend yields, even by BDC standards, to help jumpstart the search for high-yield components for an investor’s portfolio.
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