2025 BDC Stocks List Of All 40+

Up to date on March 14th, 2025 by Bob Ciura

Enterprise Improvement Firms, in any other case generally known as BDCs, are extremely well-liked amongst revenue traders. BDCs extensively have excessive dividend yields of 5% or larger.

This makes BDCs very interesting for revenue traders resembling retirees. With this in thoughts, we’ve created a listing of BDCs.

You may obtain your free copy of our BDC checklist, together with related monetary metrics resembling P/E ratios and dividend payout ratios, by clicking on the hyperlink beneath:

In fact, earlier than investing in BDCs, traders ought to perceive the distinctive traits of the sector.

This text will present an summary of BDCs. It is going to additionally checklist our prime 5 BDCs proper now as ranked by anticipated complete returns within the Positive Evaluation Analysis Database.

Desk Of Contents

The desk of contents beneath offers for simple navigation of the article:

Overview of BDCs

Enterprise Improvement Firms are closed-end funding companies. Their enterprise mannequin entails making debt and/or fairness investments in different corporations, sometimes small or mid-size companies.

These goal corporations could not have entry to conventional technique of elevating capital, which makes them appropriate companions for a BDC. BDCs put money into a wide range of corporations, together with turnarounds, creating, or distressed corporations.

BDCs are registered beneath the Funding Firm Act of 1940. As they’re publicly-traded, BDCs should even be registered with the Securities and Alternate Fee.

To qualify as a BDC, the agency should make investments no less than 70% of its property in non-public or publicly-held corporations with market capitalizations of $250 million or beneath.

BDCs generate income by investing with the objective of producing revenue, in addition to capital beneficial properties on their investments if and when they’re bought.

On this manner, BDCs function related enterprise fashions as a non-public fairness agency or enterprise capital agency.

The most important distinction is that non-public fairness and enterprise capital funding is usually restricted to accredited traders, whereas anybody can put money into publicly-traded BDCs.

Why Make investments In BDCs?

The apparent attraction for BDCs is their excessive dividend yields. It’s not unusual to seek out BDCs with dividend yields above 5%. In some circumstances, sure BDCs present 10%+ yields.

In fact, traders ought to conduct an intensive quantity of due diligence, to ensure the underlying fundamentals assist the dividend.

As at all times, traders ought to keep away from dividend cuts every time attainable. Any inventory that has an abnormally excessive yield is a possible hazard.

Certainly, there are a number of danger elements that traders ought to know earlier than they put money into BDCs. Firstly, BDCs are sometimes closely indebted.

That is commonplace throughout BDCs, as their enterprise mannequin entails borrowing to make investments in different corporations. The top result’s that BDCs are sometimes considerably leveraged corporations.

When the economic system is robust and markets are rising, leverage will help amplify constructive returns.

Nevertheless, the flip facet is that leverage can speed up losses as nicely, which might occur in bear markets or recessions.

One other danger to pay attention to is rates of interest. Because the BDC enterprise mannequin closely makes use of debt, traders ought to perceive the rate of interest setting earlier than investing.

For instance, rising rates of interest can negatively have an effect on BDCs if it causes a spike in borrowing prices.

Lastly, credit score danger is an extra consideration for traders. As beforehand talked about, BDCs make investments in small to mid-size companies.

Subsequently, the standard of the BDC’s portfolio should be assessed, to ensure the BDC won’t expertise a excessive stage of defaults inside its funding portfolio.

This may trigger adversarial outcomes for the BDC itself, which may negatively influence its skill to keep up distributions to shareholders.

One other distinctive attribute of BDCs that traders ought to know earlier than shopping for is taxation. BDC dividends are sometimes not “certified dividends” for tax functions, which is usually a extra favorable tax price.

As an alternative, BDC distributions are taxable on the investor’s bizarre revenue charges, whereas the BDC’s capital beneficial properties and certified dividend revenue is taxed at capital beneficial properties charges.

After taking all of this into consideration, traders would possibly resolve that BDCs are match for his or her portfolios. If that’s the case, revenue traders would possibly contemplate one of many following BDCs.

Tax Concerns Of BDCs

As at all times, traders ought to perceive the tax implications of varied securities earlier than buying. Enterprise Improvement Firms should pay out 90%+ of their revenue as distributions.

On this manner, BDCs are similar to Actual Property Funding Trusts.

One other issue to remember is that roughly 70% to 80% of BDC dividend revenue is usually derived from bizarre revenue.

In consequence, BDCs are extensively thought-about to be good candidates for a tax-advantaged retirement account resembling an IRA or 401k.

BDCs pay their distributions as a mixture of bizarre revenue and non-qualified dividends, certified dividends, return of capital, and capital beneficial properties.

Returns of capital scale back your tax foundation. Certified dividends and long-term capital beneficial properties are taxed at decrease charges, whereas bizarre revenue and non-qualified dividends are taxed at your private revenue tax bracket price.

The Prime 5 BDCs At present

With all this in thoughts, listed below are our prime 5 BDCs at present, ranked in line with their anticipated annual returns over the following 5 years.

BDC #5: Barings BDC Inc. (BBDC)

5-year anticipated annual return: 10.1%

Barings BDC is a enterprise improvement firm (BDC) centered on offering senior secured loans to middle-market corporations, primarily within the U.S. and internationally.

Managed by Barings LLC, a worldwide asset supervisor, the corporate invests in companies with earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) starting from $10 million to $75 million.

Supply: Investor Presentation

On February twentieth, 2025, Barings BDC posted its This autumn and full–12 months outcomes for the interval ending December thirty first, 2024. Internet funding revenue (NII) was $29.5 million, or $0.28 per share, down from $30.2 million or $0.29 per share final quarter.

This decline was pushed by a decrease weighted common yield on performing debt investments, which fell 110 foundation factors to 9.5%, as a result of rates of interest normalizing. For the 12 months, NII/share was $1.04.

In the course of the quarter, the corporate invested $137.9 million in 15 new corporations and $156.5 million in current positions. For FY2025, we count on NII/share of $1.10.

Click on right here to obtain our most up-to-date Positive Evaluation report on BBDC (preview of web page 1 of three proven beneath):

BDC #4: Blue Owl Capital (OBDC)

5-year anticipated annual return: 10.3%

Blue Owl Capital Company is a enterprise improvement firm (“BDC”) that fashioned in October 2015.

It invests and lends funds to U.S. middle-market corporations that generate annual EBITDA between $10 million and $250 million and/or annual revenues of $50 million to $2.5 billion.

The corporate generates round $1.2 billion in gross funding revenue yearly and relies in New York, New York.

Supply: Investor Presentation

Blue Owl Capital reported its This autumn and full-year outcomes for the interval ending December thirty first, 2024. For the quarter, the corporate achieved a gross funding revenue of $394.4 million, 4.0% beneath in comparison with final 12 months.

Internet funding revenue (NII) was $184.4 million, down 7.3% in comparison with final 12 months. NII/share fell 4 cents to $0.47.

For the 12 months, NII/share was $1.90, comparatively flat year-over-year.

The corporate dedicated $7.3 billion in new investments throughout 98 new and 68 current portfolio corporations in the course of the 12 months. On the finish of the 12 months, the corporate’s portfolio had a good worth of $13.2 billion, comprising investments in 227 corporations throughout 30 totally different industries.

Click on right here to obtain our most up-to-date Positive Evaluation report on OBDC (preview of web page 1 of three proven beneath):

BDC #3: Capital Southwest Corp. (CSWC)

5-year anticipated annual return: 11.1%

Capital Southwest Company is an internally-managed funding firm. The corporate makes a speciality of offering custom-made debt and fairness financing to decrease center market (LMM) corporations and debt capital to upper-middle market (UMM) corporations positioned primarily in the USA.

Capital Southwest generates round $82 million in annual revenues and relies in Dallas, Texas.

On February third, 2025, Capital Southwest declared a base quarterly dividend of $0.58 per share, and a supplemental dividend of $0.06 per share. The bottom annualized dividend stays at $2.32 per share.

Capital Southwest reported its fiscal Q3-2025 outcomes. Whole funding revenue was $52.0 million, up from $48.7 million within the prior quarter.

The expansion in funding revenue was primarily attributable to a rise in prepayment and different charges obtained throughout Q3.

Nonetheless, the weighted common yield on debt declined sequentially, falling from 12.9% to 12.1%.

Click on right here to obtain our most up-to-date Positive Evaluation report on CSWC (preview of web page 1 of three proven beneath):

BDC #2: Horizon Expertise Finance (HRZN)

5-year anticipated annual return: 13.6%

Horizon Expertise Finance Corp. is a BDC that gives enterprise capital to small and medium–sized corporations within the expertise, life sciences, and healthcare–IT sectors.

The corporate has generated enticing danger–adjusted returns by way of immediately originated senior secured loans and extra capital appreciation by way of warrants.

Supply: Investor Presentation

On March 4th, 2025, Horizon launched its This autumn and full-year outcomes for the interval ending December thirty first, 2024. For the quarter, complete funding revenue fell 16.7% year-over-year to $23.5 million, primarily as a result of decrease curiosity revenue on investments from the debt funding portfolio.

Extra particularly, the corporate’s dollar-weighted annualized yield on common debt investments in This autumn of 2024 and This autumn of 2023 was 14.9% and 16.8%, respectively.

Internet funding revenue per share (IIS) fell to $0.27, down from $0.45 in comparison with This autumn-2023. Internet asset worth (NAV) per share landed at $8.43, down from $9.06 sequentially.

Click on right here to obtain our most up-to-date Positive Evaluation report on HRZN (preview of web page 1 of three proven beneath):

BDC #1: NewtekOne Inc. (NEWT)

5-year anticipated annual return: 15.1%

Newtek One offers monetary and enterprise companies to the small- and medium-sized enterprise market in the USA.

What makes NewTek a singular firm is {that a} good portion of its revenue is derived from subsidiaries that present a big selection of enterprise companies to its massive shopper base.

The corporate additionally will get a major quantity of its revenue from being an issuer of SBA (Small Enterprise Administration loans), which solely only a few BDCs are licensed to do.

On February twenty sixth, 2025, Newtek launched its This autumn and full-year outcomes for the interval ending December thirty first, 2024. For the quarter, Newtek reported web revenue of $18.3 million, or diluted earnings per share (EPS) of $0.69, representing a 62.8% improve over the prior 12 months. Internet curiosity revenue elevated to $11.3 million, up 36.1% from This autumn 2023.

Its complete property reached $2.1 billion, marking a 50% rise year-over-year, with loans held for funding rising 23% to $991.4 million.

Newtek’s web curiosity margin was 2.80%, a slight improve from the prior 12 months.

Moreover, the corporate’s Different Mortgage Program mortgage closings skyrocketed by 199% to $91.4 million. Newtek additionally achieved important enhancements in return on tangible widespread fairness (ROTCE) and return on common property (ROAA), reaching 31.8% and 4.1%.

Click on right here to obtain our most up-to-date Positive Evaluation report on NEWT (preview of web page 1 of three proven beneath):

Ultimate Ideas

Enterprise Improvement Firms give retail traders the chance to take a position not directly in small and mid-size companies.

Beforehand, funding in early-stage or creating corporations was restricted to accredited traders, by way of enterprise capital.

And, BDCs have apparent attraction for revenue traders. BDCs extensively have excessive dividend yields above 5%, and plenty of BDCs pay dividends each month as a substitute of the extra typical quarterly fee schedule.

In fact, traders ought to contemplate the entire distinctive traits, together with however not restricted to the tax implications of BDCs.

Traders must also concentrate on the danger elements related to investing in BDCs, resembling the usage of leverage, rate of interest danger, and default danger.

If traders perceive the assorted implications and make the choice to put money into BDCs, the 5 particular person shares on this checklist may present enticing complete returns and dividends over the following a number of years.

At Positive Dividend, we frequently advocate for investing in corporations with a excessive likelihood of accelerating their dividends each 12 months.

If that technique appeals to you, it might be helpful to flick thru the next databases of dividend development shares:

The Dividend Aristocrats Checklist: S&P 500 shares with 25+ years of dividend will increase.
The Dividend Kings Checklist is much more unique than the Dividend Aristocrats. It’s comprised of 54 shares with 50+ years of consecutive dividend will increase.
The Excessive Dividend Shares Checklist: shares that attraction to traders within the highest yields of 5% or extra.
The Month-to-month Dividend Shares Checklist: shares that pay dividends each month, for 12 dividend funds per 12 months.
The Dividend Champions Checklist: shares which have elevated their dividends for 25+ consecutive years.Observe: Not all Dividend Champions are Dividend Aristocrats as a result of Dividend Aristocrats have further necessities like being within the S&P 500.