I am a retired retail investor that predominantly invests in large-cap growth companies in the S&P 500. To generate the income, I invest in some high-yield alternative investments. I live off the income my portfolio generates - never touching capital. In theory, I can live forever in retirement without running out of funds.
The purpose of this series on business development companies, or BDCs, is to help you avoid the dividend-declining companies while capturing some much-needed income. The intro article in the series was "How To Identify Risk In BDCs." This article is on Carlyle Group BDC (CGBD). This BDC sells at a 93 bps lower than average yield. BDCs with lower than average yields should have superior metrics when it comes to safety BDCs. CGBD does have a slightly better than average last twelve-month NAV (net asset value) trend. CGBD does not have a last twelve-month net investment income amount that covers the current dividend. The dividend has superior coverage based on the 2018 and 2019 consensus analysts' earnings projection. Are these mostly positive safety attributes correctly priced into the stock? I will take you through the last several earnings releases, show the 23-point red flag checklist of assessing the quality of CGBD's income, show the relative valuations for the sector, and present my assessment of CGBD.
