Albert Alfonso
Dividend investing, dividend growth investing, master limited partnerships, oil & gas

The Market Is Mispricing Prospect Capital

Along with nearly every other high-yield stock, Prospect Capital (NASDAQ:PSEC) has seen its share price fall sharply over the past few weeks. Since about May 1, Prospect Capital stock has fallen and it now trades at a small discount to its NAV. Prospect Capital offers about a $0.11 per share monthly dividend and, at current prices, yields about 12.70%.

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Prospect Capital is a business development company, or BDC, which typically invests in private company equity or debt and mezzanine loans. Unlike mREITs, Prospect Capital typically achieves a high ROE on its assets and therefore deploys very little leverage. As of March 31, Prospect Capital had a pipeline of about $500M in potential investments with...

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