JERICHO, NY / ACCESSWIRE / January 3, 2024 / According to Business Development Companies (BDCs) research website BDCInvestor.com and stock performance tracking website AverageAnnualReturn.com, the top Business Development Companies (BDCs) by market cap delivered a strong year for their investors in 2023.BDCs are a high-dividend-paying sector of the stock market by their very corporate structure, where much like REITs (Real Estate Investment Trusts) there are minimum taxable income payout requirements in order to maintain compliance with BDC rules. As a result, most BDCs pay out close to all of their taxable earnings as dividends, with cash dividends driving much of the 2023 total returns observed. For the purposes of their total return calculations, AverageAnnualReturn.com assumes dividend reinvestment (into additional shares priced at the market close on ex-dates). From BDCInvestor's Largest BDCs by Size page, we see that the top BDCs by market cap as of the start of 2024 are approximately:
- Ares Capital Corporation (ARCC) at 11.6 Billion
- Blue Owl Capital Corporation (OBDC) at 5.7 Billion
- FS KKR Capital Corporation (FSK) at 5.6 Billion
- Blackstone Secured Lending (BXSL) at 4.8 Billion
- Main Street Capital Corporation (MAIN) at 3.6 Billion
Looking up the annual returns for last year, we find the ARCC 2023 return at approximately +17.5%, the OBDC 2023 return at approximately +37%, the FSK 2023 return at approximately +28%, and the MAIN 2023 return at approximately +26%; we also note that Main Street Capital is one of the top monthly paying dividend stocks at MonthlyDividendPayingStocks.com. More information about BDCs can be found at BDCInvestor's "What Is A Business Development Company?" and "Introduction to BDCs" pages. A closely related type of investment vehicle is the "Closed End Fund" (CEF); much like CEFs, when a BDC comes public a fixed amount of capital is raised and then the shares of the BDC are traded just like any other stock. But BDCs tend to also conduct "follow-on offerings" of additional shares subsequent to their IPOs in order to grow their portfolios (because with most of their taxable income paid out each year to shareholders, portfolio growth can typically only come via new common equity issuances as well as debt and preferred stock issuances - we recommend looking at the "BDC Baby Bonds & Preferreds" page at BDCInvestor, and researching individual securities further at PreferredStockChannel.com and PreferredStockInvesting.com). This dynamic means that just like with CEFs, the pricing of shares of BDC stocks in the market will react to fluctuating supply and demand forces, creating situations where shares may trade above or below the per-share net asset value. Investors must therefore consider not just the company's investment objectives, not just the quality of the management, not just the performance of the underlying portfolio, but also must consider when shares are trading at attractive entry/exit points. (For more information about CEFs, visit CEFChannel.com)
About BNK Invest, Inc
The websites referenced in this article are owned and operated by online media company BNK Invest, Inc. BNK provides a number of investment research and news websites to the public, aimed at empowering investors to better research individual stocks and strategies.
Contact Information:info@bnkinvest.com
SOURCE: BNK Invest, Inc
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