Sure Dividend

High-Quality Dividend Stocks, Long-Term Plan
Member's Area

2024 BDC Stocks List Of All 40+ | The 5 Best BDCs To Buy Now

Updated on May 10th, 2024 by Bob Ciura

Business Development Companies, otherwise known as BDCs, are highly popular among income investors. BDCs widely have high dividend yields of 5% or higher.

This makes BDCs very appealing for income investors such as retirees. With this in mind, we’ve created a list of BDCs.

You can download your free copy of our BDC list, along with relevant financial metrics such as P/E ratios and dividend payout ratios, by clicking on the link below:


Of course, before investing in BDCs, investors should understand the unique characteristics of the sector.

This article will provide an overview of BDCs. It will also list our top 5 BDCs right now as ranked by expected total returns in The Sure Analysis Research Database.

Table Of Contents

The table of contents below provides for easy navigation of the article:

Overview of BDCs

Business Development Companies are closed-end investment firms. Their business model involves making debt and/or equity investments in other companies, typically small or mid-size businesses.

These target companies may not have access to traditional means of raising capital, which makes them suitable partners for a BDC. BDCs invest in a variety of companies, including turnarounds, developing, or distressed companies.

BDCs are registered under the Investment Company Act of 1940. As they are publicly-traded, BDCs must also be registered with the Securities and Exchange Commission.

To qualify as a BDC, the firm must invest at least 70% of its assets in private or publicly-held companies with market capitalizations of $250 million or below.

BDCs make money by investing with the goal of generating income, as well as capital gains on their investments if and when they are sold.

In this way, BDCs operate similar business models as a private equity firm or venture capital firm.

The major difference is that private equity and venture capital investment is typically restricted to accredited investors, while anyone can invest in publicly-traded BDCs.

Why Invest In BDCs?

The obvious appeal for BDCs is their high dividend yields. It is not uncommon to find BDCs with dividend yields above 5%. In some cases, certain BDCs provide 10%+ yields.

Of course, investors should conduct a thorough amount of due diligence, to make sure the underlying fundamentals support the dividend.

As always, investors should avoid dividend cuts whenever possible. Any stock that has an abnormally high yield is a potential danger.

Indeed, there are multiple risk factors that investors should know before they invest in BDCs. First and foremost, BDCs are often heavily indebted. This is commonplace across BDCs, as their business model involves borrowing to make investments in other companies. The end result is that BDCs are often significantly leveraged companies.

When the economy is strong and markets are rising, leverage can help amplify positive returns. However, the flip side is that leverage can accelerate losses as well, which can happen in bear markets or recessions.

Another risk to be aware of is interest rates. Since the BDC business model heavily utilizes debt, investors should understand the interest rate environment before investing. For example, rising interest rates can negatively affect BDCs if it causes a spike in borrowing costs.

Lastly, credit risk is an additional consideration for investors. As previously mentioned, BDCs make investments in small to mid-size businesses.

Therefore, the quality of the BDC’s portfolio must be assessed, to make sure the BDC will not experience a high level of defaults within its investment portfolio. This would cause adverse results for the BDC itself, which could negatively impact its ability to maintain distributions to shareholders.

Another unique characteristic of BDCs that investors should know before buying is taxation. BDC dividends are typically not “qualified dividends” for tax purposes, which is generally a more favorable tax rate. Instead, BDC distributions are taxable at the investor’s ordinary income rates, while the BDC’s capital gains and qualified dividend income is taxed at capital gains rates.

After taking all of this into account, investors might decide that BDCs are a good fit for their portfolios. If that is the case, income investors might consider one of the following BDCs.

Tax Considerations Of BDCs

As always, investors should understand the tax implications of various securities before purchasing. Business Development Companies must pay out 90%+ of their income as distributions. In this way, BDCs are very similar to Real Estate Investment Trusts.

Another factor to keep in mind is that approximately 70% to 80% of BDC dividend income is typically derived from ordinary income. As a result, BDCs are widely considered to be good candidates for a tax-advantaged retirement account such as an IRA or 401k.

BDCs pay their distributions as a mix of ordinary income and non-qualified dividends, qualified dividends, return of capital, and capital gains.

Returns of capital reduce your tax basis. Qualified dividends and long-term capital gains are taxed at lower rates, while ordinary income and non-qualified dividends are taxed at your personal income tax bracket rate.

The Top 5 BDCs Today

With all this in mind, here are our top 5 BDCs today, ranked according to their expected annual returns over the next five years.

BDC #5: Prospect Capital (PSEC)

Prospect Capital Corporation is a Business Development Company, or BDC, that provides private debt and private equity to middlemarket companies in the U.S. The company focuses on direct lending to owneroperated companies, as well as sponsorbacked transactions.

Prospect invests primarily in first and second lien senior loans and mezzanine debt, with occasional equity investments. 

Prospect posted second quarter earnings on February 8th, 2024, and results were somewhat weak once again. Net investment income per share, which is akin to earnings-per-share for other companies, came to 24 cents. That was off three cents from the year-ago period.

Total investment income, which is PSEC’s measure of revenue, was $211 million. That was down fractionally year-over-year from $213 million. Net asset value per share declined from the first quarter from $9.25 to $8.92.

Click here to download our most recent Sure Analysis report on PSEC (preview of page 1 of 3 shown below):

BDC #4: Monroe Capital (MRCC)

Monroe Capital Corporation provides financing solutions primarily to lower middle-market companies in the United States and Canada. The company primarily invests in senior and “unitranche” secured loans ranging between $2.0 million and $25.0 million each. It generates nearly $57 million annually in total investment income.

On March 11th, 2024, Monroe Capital Corporation reported its Q4 and full-year results for the period ending December 31st, 2023. Total investment income for the quarter came in at $15.5 million, compared to $15.6 million in the previous quarter.

The weighted average portfolio yield fell during the quarter, from 12.4% to 12.1%, though it remained rather high as a result of an elevated interest rates environment. A lower number of portfolio companies also impacted total investment income.

Click here to download our most recent Sure Analysis report on MRCC (preview of page 1 of 3 shown below):

BDC #3: Great Elm Capital Corp. (GECC)

Great Elm Capital Corporation is a business development company that specializes in loan and mezzanine, middle market investments. It seeks to create long-term shareholder value by building its business across three verticals: Operating Companies, Investment Management, and Real Estate.

The company favors investing in media, healthcare, telecommunication services, communications equipment, commercial services and supplies.

On February 29th, 2024, Great Elm Capital Corp (GECC) reported its financial results for the fourth quarter. In February 2024, the company successfully raised $24 million in equity at Net Asset Value through a special purchase vehicle (SPV), with Great Elm Group (GEG) contributing $6 million to the SPV.

This funding boost coincided with the announcement of the fourth consecutive quarter of Net Investment Income (NII) exceeding the base dividend, with NII for the quarter ending December 31, 2023, at $3.3 million or $0.43 per share, compared to $3.1 million or $0.40 per share for the preceding quarter.

Click here to download our most recent Sure Analysis report on GECC (preview of page 1 of 3 shown below):

BDC #2: TriplePoint Venture Growth BDC (TPVG)

TriplePoint Venture Growth BDC Corp specializes in providing capital and guiding companies during their private growth stage, before they eventually IPO to the public markets.

TPVG offers debt financing to venture growth companies, proposing a less dilutive way to raise capital than raising additional equity while also helping with the businesses’ acceleration and expansion.

On March 6th, 2024, the company posted its Q4 and full-year results for the period ending December 31st, 2023. For the quarter, the company achieved a total investment income of $33.0 million compared to $34.9 million in Q4-2022.

The decrease in total investment was primarily due to a lower weighted average principal amount outstanding on the BDC’s income-bearing debt investment portfolio.

Click here to download our most recent Sure Analysis report on TPVG (preview of page 1 of 3 shown below):

BDC #1: Oaktree Specialty Lending Corp. (OCSL)

Oaktree Specialty Lending Corp. provides lending services and invests in small and mid-sized companies.

On February 1st, 2024, Oaktree Specialty Lending Corp. released its first quarter of fiscal 2024 results for the period ending December 31st, 2023. For the quarter, the company reported adjusted net investment income (NII) of $44.2 million or $0.57 per share, as compared with $47.8 million or $0.62 per share in the fourth quarter of fiscal 2023.

The quarterly decrease in earnings was primarily due driven by lower adjusted total investment income, partially offset by lower incentive fees. The weighted average yield on new debt investments was 11.6%, slightly down from 12.0% in the fourth quarter of fiscal 2023.

Click here to download our most recent Sure Analysis report on OCSL (preview of page 1 of 3 shown below):

Final Thoughts

Business Development Companies allow everyday retail investors the opportunity to invest indirectly in small and mid-size businesses. Previously, investment in early-stage or developing companies was restricted to accredited investors, through venture capital.

And, BDCs have obvious appeal for income investors. BDCs widely have high dividend yields above 5%, and many BDCs pay dividends every month instead of the more typical quarterly payment schedule.

Of course, investors should consider all of the unique characteristics, including but not limited to the tax implications of BDCs. Investors should also be aware of the risk factors associated with investing in BDCs, such as the use of leverage, interest rate risk, and default risk.

If investors understand the various implications and make the decision to invest in BDCs, the 5 individual stocks on this list could provide attractive total returns and dividends over the next several years.

At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.

If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:

Thanks for reading this article. Please send any feedback, corrections, or questions to