A fresh report from Oppenheimer evaluates the BDCs. The analyst team at Oppenheimer feels that many of these companies have already recovered, but three companies in particular still offer value to investors.
One company worth looking at here is Garrison Capital Inc. (NASDAQ: GARS). This company has been public for six quarters and has a dividend yield of 9.5%. Garrison recently received approval for a small business investment company (SBIC) license, which analysts speculate will be accretive to earnings. Garrison Capital has a $15 target from Oppenheimer, and the $1.45 projected dividend represents an implied total return of 16.6%. The Thomson/First Call consensus analyst price target is $15.75, and shares have traded in a 52-week range of $13.68 to $15.40.
CM Finance Inc. (NASDAQ: CMFN) entered the market in February and has issued some very shareholder-friendly fee waivers that expire at the end of 2016. These waivers allow for a 9.6% dividend yield, which translates to $1.34. The dividend is planned to rise to $1.40 in 2016. CM Finance has a $15 target from Oppenheimer, and its $1.39 projected dividend indicates an implied total return of 15%. The consensus analyst price target is $15.50, and the 52-week range is $12.60 to $17.04.
American Capital Senior Floating Ltd. (NASDAQ: ACSF) focuses primarily on liquid floating-rate investments. The company boasts a strong risk-adjusted return with high-quality liquid assets. This in turn causes the yield to be correspondingly lower at 8%. American Capital Senior Floating has an Oppenheimer price target of $15, and its $1.12 projected dividend implies a total return potential of 15%. The consensus price target is $15.44, and the 52-week range is $13.00 to $14.73.
Business development companies have become popular of late because they allow for solid returns via their dividends.
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