These are the five general criteria I use to evaluate BDCs:
- Profitability (EPS to cover dividends, NAV and EPS growth)
- Risk (diversification, portfolio quality, volatility, leverage)
- Payout (sustainable, consistent, growing)
- Analyst Opinions
- Valuation (NAV, P/E, PEG)
Below is an oversimplified table with rankings between 0 and 10 (10 being the best) relative to the 25 BDCs I have reviewed. In reality I use different weightings for almost 100 data points on each company and my personal rankings (based on my risk/return comfort) are close to these but far from exact.
TCP Capital (TCPC) is currently one of the more profitable BDCs with excellent dividend coverage as discussed in this article and reports results on May 9, prior to the opening of the markets with projected EPS of $0.39.
Main Street Capital (MAIN) has a low dividend yield and high multiples, but a favorable risk profile and performs well in down markets. It will release its first quarter 2013 results on May 9, after the market closes with projected EPS of $049 adequately covering its dividends. In my recent article "High Priced BDCs: Are They Worth It?" I focus on both MAIN and Triangle Capital (TCAP).
PennantPark Floating Rate Capital (PFLT) has a safer asset class mix and floating rates but offset by high leverage ratios and small market cap as discussed in this article. The current payout is low and hopefully it will continue to grow its dividend, reporting results on May 9, after the close of the markets.
Triangle Capital (TCAP) will release results on May 9 as well with projected EPS of $0.57 covering its dividend of $0.54.
PennantPark Investment (PNNT) is one of the higher yielding BDCs as discussed in the article "Highest-Yield BDCs With The Lowest Multiples" and reports results on May 8, after the close of the markets with projected EPS of $0.27 just short of covering its $0.28 dividend.
Fifth Street Finance (FSC) is reporting results after the markets close on May 8, with projected EPS of $0.28 just short of covering its dividend but is expected to grow as discussed in "BlackRock Kelso Capital: Is It Better Than Fifth Street Finance?".
TICC Capital (TICC) will discuss first quarter 2013 earnings on May 7, with projected EPS $0.27 short of covering its $0.29 dividend with a higher risk profile compared to other BDCs as discussed in this article.
For more information about BDCs and how I evaluate them, please see this article.