Fidus Investment: Q2 Earnings Reinforce Strong Cash Generation To Support Distribution (Rating Upgrade)

Aug. 02, 2024 8:04 AM ETFidus Investment (FDUS)FDUS15 Comments
Cain Lee
5.98K Followers
(16min)

Summary

  • Fidus Investment operates as a BDC focusing on lower middle market companies, offering a high dividend yield of 14.2% that is well-supported.
  • Portfolio strategy emphasizes risk management, with diverse investments and strong underwriting leading to improved non-accrual rates.
  • Net investment income covers the base distribution by a large 132%. As a result, a supplemental distribution of $0.14 per share has been issued.
  • Future interest rate cuts may actually cause the portfolio to grow, as management may see an increase in borrowers to capitalize on.

cash cow with change

susandaniels/iStock via Getty Images

Overview

Fidus Investment (NASDAQ:FDUS) operates as a business development company that generates its earnings by making debt and equity investments within lower middle market companies. I previously covered FDUS in May and rated it

This article was written by

5.98K Followers
Financial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 15 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering high quality dividend stocks and other assets that offer potential for long term-growth that pack a serious punch for bill-paying potential. I use myself as an example that with a solid base of classic dividend growth stocks, sprinkling in some Business Development Companies, REITs, and Closed End Funds can be a highly efficient way to boost your investment income while still capturing a total return that follows traditional index funds. I create a hybrid system between growth and income and manage to still capture a total return that is on par with the S&P.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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