Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Prospect Capital Corp (PSEC)
Old 03-31-2009, 07:09 AM   #1
Dryer sheet wannabe
Join Date: Jan 2009
Posts: 20
Prospect Capital Corp (PSEC)

I'm fairly new to investing (26 yrs and max out my 401k and Roth) and came across a stock that I don't quite understand. This stock, PSEC, caught my attention because it just raised its divident for the 18th consecutive quarter. It is yielding almost 20%. Does anyone own this or think its a good idea for a small portion of my portfolio?

Prospect Capital Declares 18th Consecutive Quarterly Dividend Increase, Representing a 17.5% Current Dividend Yield - Yahoo! Finance
kybec29 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-31-2009, 04:12 PM   #2
Recycles dryer sheets
Join Date: Oct 2005
Posts: 325
Appears to be an investment company (i.e., they invest in private and microcap public companies). You'd have to dig into their filings and such to figure out exactly what companies they own and in which industries.

Be hard to judge how they are doing unless you understood exactly who they own.

Typically though, the smaller companies have a harder go of things in a recession.

20% dividend is pretty tantalizing though.
CybrMike is offline   Reply With Quote
Old 03-31-2009, 04:37 PM   #3
Recycles dryer sheets
Join Date: May 2006
Posts: 230
It is a business development company (BDC). Like REITs they are required to payout most of their earnings to shareholders. Under the Investment Company Act they are limited to 1:1 leverage.

PSEC is one of the better BDC's, but they are also priced that way relative to their peers. They are trading at about 60% of NAV which sounds cheap (and would have been in the past) but there are a lot that are cheaper.

There's really no shortcut -- you need to identify and research other BDC's to understand the differences between them. Some have a lot of low cost, long term SBA debt. Some have bank lines coming due or being amortized. Some have a lot of equity in their portfolio. Some own mostly senior secured debt. Some amortize their loans over short periods. Some collect a lot of PIK (payment in kind) interest. All of them determine valuations themselves since they hold mostly Level 3 assets. They have different levels of leverage from none to over 100% (i.e. covenant and Investment Act violations). Some pseudo-leverage themselves either by investing in other leverages entities or buying CDO/CLO tranches.

There are a lot of differences. The only third party I've seen that does a good job with them is Stifel Nicolaus -- they have some good summary reports.
terminator is offline   Reply With Quote
Old 05-12-2009, 04:44 PM   #4
Dryer sheet wannabe
Join Date: Jan 2009
Posts: 20
new article posted on seeking alpha...

Prospect Capital: A Relatively Safe Dividend Yield

[link removed]

I dont participate in options so i'm just looking at this as a buy and hold for the dividend. Still haven't bought in yet.
kybec29 is offline   Reply With Quote
Old 05-12-2009, 05:08 PM   #5
Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
I would not invest in PSEC or other BDCs until you understand what they are. Just because PSEC has a 20% yield does not make it a good BDC. Look at how the dividend is supported.

"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
jimnjana is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Lessons from the Marine Corp clifp Other topics 13 03-10-2009 11:00 PM
Should I consider and S Corp? Rich_by_the_Bay FIRE and Money 17 05-29-2007 02:34 PM
LLC vs S-corp thefed Other topics 5 12-20-2006 09:34 PM
Investment idea: Deluxe Corp. brewer12345 FIRE and Money 9 03-30-2005 04:08 PM
Retire from mega corp america MattInAustin Life after FIRE 41 02-06-2005 06:30 AM

» Quick Links

All times are GMT -6. The time now is 12:01 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.