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BDCL: A 14% Yielder, If You Can Tolerate The Volatility


  • BDCL aims to deliver double the performance of the Wells Fargo BDC Index.
  • This results in the note paying out an incredible 14.4% distribution at its current market price.
  • The note is much more volatile than its sister BDCS due to the leverage.
  • Business development companies have seen their dividends under pressure due to rising interest rates, which also pressures the note's distribution.
  • BDCL thus offers a very high level of current income to investors that can stomach its volatility.

One of the more common investment vehicles, if not surprisingly underfollowed ones, among income investors is business development companies, commonly called BDCs. These vehicles function very similarly to private equity firms in that they provide funding, typically in the form of debt, to privately-held companies and then generate their income from the interest paid on these loans. In addition, much like mortgage REITs, BDCs can also borrow money to make these loans and profit off of the interest spread between the rate it receives and the rate it pays. I discussed one BDC, Hercules Capital (HTGC), in a recent article but there are numerous other ones, most yielding around 10%. There is a way to get an even better income yield off of these vehicles however and that is to invest in the UBS ETRACS 2xLeveraged Long Wells Fargo Development Company ETN (NYSEARCA:BDCL).

About The ETN

The ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN is designed to track a leveraged investment in the Wells Fargo Business Development Company Index. This index is, according to Wells Fargo Securities, designed to track the performance of all business development companies that are listed on either the NYSE or NASDAQ. The index only includes those companies that are specifically registered with the SEC as business development companies and is market capitalization-weighted.

Some of the companies that make up the Wells Fargo index will be familiar to investors in the sector, others are much lesser-known names. Here are the companies that make up more than 1% weighting in the index:

Source: UBS

As the name implies, the note is designed to deliver double the performance of this index. That is perhaps its greatest appeal, particularly when it comes to distributions.


As already mentioned, business development companies are among the highest-yielding firms trading in

This article was written by

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In-depth Research on underfollowed dividend stocks with 7%+ yields
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