16% Yield, 23% Discount: BlackRock TCP Capital Corp

Jul. 03, 2020 9:15 AM ETBlackRock TCP Capital Corp (TCPC)67 Comments


  • TCPC yields 15.95%.
  • It's selling at a 23.3% discount to NAV.
  • No debt maturities until 2022.
  • Looking for a helping hand in the market? Members of Hidden Dividend Stocks Plus get exclusive ideas and guidance to navigate any climate. Get started today »

BlackRock TCP Capital Corp (NASDAQ:TCPC) is a Business Development Corp., a BDC, specializing in direct equity and debt investments in middle-market, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million. It prefers to make equity investments in companies for an ownership stake. (TCPC site)

Like other BDC's that we've covered in recent articles, TCPC has gotten hit hard in the 2020 COVID-19 crash - it's down -36% year to date, even with bouncing back 61.65% over the past quarter:Valuations:

That price decline has led to a hefty -23.3% discount to NAV for TCPC, which is selling at a deeper Price/Book discount of .78X vs. the industry average of .87X. Price/Sales also is much lower, at 2.76X, vs. the 4.42X industry average, while the market is demanding a much higher yield in an industry where yields are already at nosebleed levels:Dividends:

A positive note for TCPC is that, unlike many other BDCs, which rely on realized gains to cover their dividends, it has a long history of covering them with Net Investment Income, NII. Its NII/Dividend coverage was 1.06X in Q1 '20, 1.12X in 2019 and 1.10X in 2018:

(TCPC site)

Management has kept the quarterly dividend at $.36 since Q2 2013. At $9.02, TCPC yields 15.96%, and should go ex-dividend next ~9/11/20. It goes ex-dividend and pays in a March/June/Sept./Dec. schedule.


97.91% of TCPC's distributions were deemed ordinary dividends in 2019, with the remaining 2.09% as Return of Capital.

(TCPC site)


TCPC's biggest industry concentration is Internet Software & Services, 12%, followed by Diversified Financial Services, at 11.1%. It looks pretty well diversified, but it does have limited exposure to

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