Are BDC good investments?
If you’re looking for stable, high-yield income, business development company (BDC) stocks should be on your short list. BDCs are generally some of the highest-yielding equities available, and today is no exception.
What does BDC stand for in investing?
A Business Development Company (“BDC”) is a form of unregistered closed-end investment company in the United States that invests in small and mid-sized businesses.
How does a BDC make money?
Most BDCs make money investing in companies via debt financing (buying bonds and providing loans) to a company. … If they hold stock in the companies they invest in, the BDCs profit if the stock price (or net asset value) increases. BDCs also make money by investing in senior secured bonds and loans.
Is BDC safe?
The debt securities that generally make up a BDC’s investment portfolio are relatively illiquid and tend to have high credit risk, or the risk of default, leading to increased volatility and a greater likelihood of large price declines during a market downturn.
Who would most likely invest in a BDC?
Qualifying as a BDC
The BDC must invest at least 70% of its assets in private or public U.S. firms with market values of less than US$250 million. These companies are often young businesses, seeking financing, or firms that are suffering or emerging from financial difficulties.
Do BDC pay qualified dividends?
Dividends paid by tax-exempt corporations or trusts such as Business Development Corporations (BDCs), Master Limited Partnerships (MLPs), Limited Liability Corporations (LLCs), or Real Estate Investment Trusts (REITs) are considered non-qualified, and may be taxed at ordinary rates.
How are BDC dividends taxed?
As Regulated Investment Companies, BDCs aren’t considered taxable entities. In exchange for this favorable tax treatment, however, a BDC must distribute at least 90% of its taxable income to shareholders as ordinary dividends each year. Since they retain very little of their earnings, BDCs don’t pay corporate taxes.
Are BDCs mutual funds?
In some ways, BDCs are similar to other investment funds – like mutual funds, other closed-end funds, and exchange-traded funds (ETFs): … Investors own shares representing a pro rata or proportional part of the BDC. BDCs’ offerings of shares are registered with the SEC, and BDCs are regulated by the SEC.
Is a BDC a 40 Act fund?
BDCs are closed-end investment companies; however, BDCs are exempt from many of the regulatory constraints imposed by the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules thereunder.
Are BDCs private equity?
BDCs are a form of Private Equity Fund; however unlike traditional Private Equity Limited Partnerships (Private Structure Private Equity Funds), they are publicly traded providing investors the liquidity offered from being listed on the public stock exchanges.
Are BDCs closed end funds?
BDCs are actually a type of closed-end fund. The biggest difference to a traditional CEF is that BDCs take a more hands-on approach. They invest in private deals, typically with small to medium-sized businesses.
How much do BDC reps make?
The average bdc representative salary in the USA is $45,000 per year or $23.08 per hour. Entry level positions start at $29,250 per year while most experienced workers make up to $70,000 per year.