PennantPark Floating Rate Capital: Stable returns in an uncertain environment
1. Introduction:
- PennantPark Floating Rate Capital $PFLT: The company is a business development company (BDC) that provides high-interest loans to mid-sized businesses that traditional banks do not target. This focus allows it to choose borrowers who have a solid ability to repay their debts.
2. Dividend yield and stability:
- Attractive Dividends: $PFLT pays regular monthly dividends, with a current dividend yield of 10.8%. The company has been working to maintain or increase its dividend since 2011, providing investors with a stable and reliable income. This yield is often considered more reliable than many mortgage REITs.
3. Portfolio and risk profile:
- Senior Secured Debt Portfolio: Approximately 87% of $PFLT' s portfolio is senior secured debt, meaning that these loans are paid off first in the event of the borrower's bankruptcy. This reduces risk for investors and increases the likelihood of stable income.
- Interest Rates and Risk: Loans are made at variable interest rates. Although rates are high, only three portfolio companies, which make up 1.5% of the portfolio, were in nonaccrual status at the end of June, indicating the strength of the loan portfolio.
4 Financials:
- Revenue and Stability: In the fiscal second quarter ended June 30, the average yield from borrowers was 12.1%, a strong indicator of the company's ability to generate revenue from the portfolio. This stability is reflected in the company's dividend policy, which provides a stable yield for investors.
5. Outlook:
- Interest Rate Reduction: the Federal Reserve is expected to reduce interest rates by the end of the year, which could make it easier for PFLT borrowers to make interest payments. This adds to the long-term stability and attractiveness of this stock for income-seeking investors.
PennantPark Floating Rate Capital offers an attractive dividend yield and stable income due to its focus on senior secured debt. Its long-term stability and expected decline in interest rates make this stock a great choice for investors seeking a reliable source of income.
It's a nicely built business and the dividend is great too, but I guess I'm not interested enough in this company to include their stock in my portfolio.
The company pays a high dividend, but the stock is not growing much.
It doesn't look bad at all. The numbers and data look nice, so I'm thinking of buying it.
The dividend is really nice and the company looks good. At what price would you overbought?
The chart itself is interesting. With the exception of a rapid decline and then an immediate rise in 2020, Cohesion is holding at similar levels to its IPO. It's an interesting dividend play. It may be interesting from that perspective, I certainly wouldn't buy it on growth. They have a lot of debt for how much money they're making or what their margins are.