Warning: Business Development Companies Just Got Doubly Risky

At this point of the credit cycle, a lot of securities look cheap. Business Development Companies (BDCs) are looking exceptionally cheap right now - trading at 82.7% of their net asset value and kicking off very high income of 10% to 17% at the same time. Due to their structure as closed-end funds that pay high dividends, BDCs are designed to appeal to retail investors. The problem is that investors often forget that high dividends come with a price - and that price is usually that the loans made by these companies are illiquid and high risk. And Congress just made the risk much worse... Tags: BCDs , Business Development Companies , Closed-end Funds , credit cycle , Credit markets , high dividend stocks , high-income investments , high-yield investments To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2015 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post Warning: Business Development Companies Just Got Doubly Risky appeared first on Money Morning - We Make Investing Profitable .
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