3 Asset Management Stocks with 10-13% Dividend Yields

Published Tue, 22 Sep 2015 11:00 CET by DividendYields.org

Dividend investing is an excellent strategy for big gains over time. While it doesn’t provide the instant capital appreciation of short-term investments and it may become boring in a rising bull market, it guarantees a steady investment strategy that can greatly benefit your portfolio. The question is: how do you select the best dividend paying stocks? Regardless if you’re a novice or a large-scale investor, the two key determinants when it comes to selecting the right dividend stock for your portfolio are the stock’s long-term prospect and its financial/valuation metrics.
This article discusses three low debt, high-yield dividend paying stocks trading in the asset management industry. The analysis shows that the average D/E ratio of all three companies is 0.69, whereas their average dividend yield amounts to 12.32%, justifying that when a stock has a long-term growth potential and strong financials, it can generate a steady stream of income for its shareholders. Also, the average Debt-to-Assets (D/A) ratio is 0.38 for all three companies, suggesting that they are not using too much debt to finance their assets.
The D/A ratio indicates the proportion of a company’s assets that are being financed with debt, rather than equity. The D/A ratio is used to determine the financial risk of a business: a ratio greater than 1 shows that a substantial proportion of assets are being funded with debt, while a low ratio indicates that the majority of asset funding is coming from equity.
All three stocks are trading at an average beta of 0.94, which makes them safe for investment.

Nasdaq Year-to-Date Stock Performance Graph" alt="Apollo Investment, Fidus Investment and Prospect Capital versus Nasdaq Year-to-Date Stock Performance Graph">
Apollo Investment Corporation (Nasdaq: AINV), a New-York based investment management company that provides traditional and alternative financing solutions to middle-market companies, is currently trading at a price of $6.00 and has a market cap of $1.42 billion. For investors that focus on high-yield stocks, AINV seems like a good bet as the stock has a dividend yield of 13.33% with an annualized dividend of $0.80. On the downside, the company has a high payout ratio, mainly justified by its low EPS of $0.09. The good news is that analysts forecast an average EPS of $0.85 over the next two years, which will bring the payout ratio down to 94.1%, closer to its peers as well. Additionally, analyst consensus estimates an average annual earnings growth of 5%, whereas the company’s D/A ratio is only 0.40.

Fidus Investment Corporation (Nasdaq: FDUS) is an Evanston-based investment company that specializes in debt and equity capital investment primarily in lower middle market companies operating in a wide range of industries in the U.S. FDUS is currently trading at $14.29 with a market cap of $231 million. The stock has slightly underperformed the market, down by 0.90% in the last month and -3.77% YTD. The FDUS’ low D/E ratio is in line with the company’s low payout ratio, due to an EPS of $1.63, which is expected to average $1.64 up to 2016. The company’s dividend yield amounts to 10.92% with an annualized dividend of $1.56, whereas the company’s D/A ratio is 0.43. Analyst consensus estimates an average annual earnings growth of 8% for the next five years.

Name Price ($) 52 wk low 52 wk high 52 wk low % 52 wk high % Market Cap ($ b) P/E D/E Beta Payout Ratio
Apollo Investment 6.00 5.89 8.59 1.87% -30.15% 1.42 6.07 0.73 1.13 889%
Fidus Investment 14.29 7.49 18.0 90.79% -20.61% 0.23 8.71 0.77 0.93 96%
Prospect Capital 7.86 5.30 10.2 48.30% -22.94% 2.79 8.10 0.58 0.75 103%

Prospect Capital Corporation (Nasdaq: PSEC), a New-York based investment company with a focus on mezzanine finance, private equity, emerging growth and buyouts of industrial and energy companies, has a market cap of $2.79 billion, currently trading at a price of $7.86. According to analysts that follow PSEC, the short-term price target is $9.79, with a higher end of $12 and a lower end of $8. This is further sustained by PSEC’s price performance, up by 8.41% in the last month, and only -4.83% YTD. So, the stock shows momentum. In terms of financial analysis, the long-term debt represents 58% of the company’s total equity and 32% of the company’s total assets. Although the D/E ratio is well below 2, PSEC’s payout ratio is quite high due to the low EPS of $0.97. On the upside, the average EPS up to 2017 is $1.02, whereas the company delivers an annualized dividend of $1. This generates a dividend yield of 12.72%, which is well above the magic mark of 3%.


Stock name Dividend Yield
Prospect Capital 10.76
Apollo Investment 10.73
Fidus Investment 10.53

Articles featuring Prospect Capital (PSEC):

Upcoming Rally For BDCs Currently Yielding 13%

Seeking AlphaDividend IdeasUpcoming Rally For BDCs Currently Yielding 13%Jun. 30, 2020 10:50 AM ET|| Includes: AINV, ARCC, CGBD, FSKR, GBDC, GLAD, GSBD, HTGC, MAIN, MRCC, NMFC, NMFX, ORCC, PSEC, TCPC, TPVG, TSLXby: BDC BuzzBDC Buzz Sustainable DividendsBuild a portfolio with sustainable dividend yields ranging from 8% to 12%SummaryAs predicted, BDC pricing has pulled back a bit, driving an average yield of 13%.However, I believe that BDC pricing could rally as BDCs report... Read more

Ares Capital's NAV, Dividend, And Valuation Vs. 14 BDC Peers - Part 2 (Includes Q3-Q4 2020 Dividend Projections)

Seeking AlphaDividend Ideas | Financials Ares Capital's NAV, Dividend, And Valuation Vs. 14 BDC Peers - Part 2 (Includes Q3-Q4 2020 Dividend Projections)Jun. 26, 2020 6:14 AM ET|| About: Ares Capital (ARCC), Includes: AINV, BDCS, BIZD, BLK, GAIN, GAINL, GAINM, GBDC, MAIN, MCC, MCV, MCX, NEWT, NEWTI, NEWTL, OCSI, OCSL, ORCC, PBB, PBC, PFLT, PSEC, SLRC, TCPC, TSLXby: Scott KennedyScott Kennedy The REIT ForumEasy Portfolios, Real-Time Buy Alerts, and A Better RecordSummaryPart 2 of this... Read more

Top Monthly-Paying Dividend Stocks And Funds For June

Here are your June U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net gains: 1. Stocks by-yield (77), 2. Stocks by price-upside (30), 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >8.5% (80).U.S. MoPay equities are neither bigger nor better. Canadian MoPays are omitted but many Canadian firms are U.S.-listed OTC. CEICs/ETFs/ETNs are combined US/Canadian and all show yields over 8.5%.Items: 1. Top MoPay stock gains, 2.... Read more

8% To 10% Balanced Portfolio Yield Investing In America: Part 2

This is a series of articles discussing retirement portfolios using BDCs currently yielding more than 12% and their safer notes, baby bonds/preferred shares with yield-to-maturities ranging from 6% to 9%.This article discusses the interest expense and asset coverage ratios for one of the higher-yield BDCs (~13.5%) and its three Baby Bonds that I own.This information is used along with portfolio credit quality to rank each Baby Bond as "Lower Risk," "Average Risk," or... Read more

Ares Capital's NAV, Dividend, And Valuation Versus 14 BDC Peers (Post Q1 2020 Earnings - Attractive Valuation)

Part 1 of this article compares ARCC’s recent quarterly change in NAV, quarterly and trailing twelve-month economic return, NII, and current valuation to fourteen BDC peers.Other metrics analyzed include each company’s oil and gas exposure, NII per share, price to annualized NII ratio, and percentage of income attributable to capitalized PIK income.As a direct result of the COVID-19 sector sell-off, some stocks (including ARCC) remain attractively valued.My buy, sell, or hold... Read more