Co-authored by Treading Softly.
Recalling the tumultuous years of 2020 and 2022 – a time when the world seemed entirely alien due to the global pandemic – it’s become a hazy memory for many. As the world gradually returned to normalcy by 2023, there’s a sense of relief and a longing for the days of unpredictable market swings where missed opportunities haunted investors. The longing for substantial and reliable yields seemed to beckon.
For those who missed the boat, the time has come to embark on new opportunities.
Seeking Lucrative Yields
High-yield stocks often carry unfavorable traits, making them unappealing to the broader market. They fall out of favor, resulting in attractive yields due to low share prices and high dividend payouts to compensate. Companies like SLR Investment Corp. (SLRC) and Blue Owl Capital Corporation (OBDC) exemplify this narrative.
SLRC: Yield 10.9%
SLRC weathered the storm – facing concerns about its ability to cover dividends post-COVID. However, Q3 of 2023 brought good news, with the net investment income (NII) covering the dividend comfortably. The stock is now trading at a significant discount from its book value, presenting an appealing opportunity.
OBDC: Yield 9.4%
Despite past dividend coverage issues, OBDC is now thriving, boasting increased dividends and supplements, backed by exceeding net investment income. Furthermore, its leverage remains within comfortable parameters, propelling it to trade at a discount to its net asset value (NAV).
Embracing the Future
Investing in well-established BDCs, such as SLRC and OBDC, can yield fruitful results, particularly in times of rapid interest rate hikes. These companies are well-positioned to weather economic storms and emerge stronger, offering stability and consistent income ideal for retirement portfolios.
Charting a Steady Course
Investing in high-yield stocks that provide stable and growing dividends is pivotal for a stress-free retirement. The “Income Method” approach aims to generate formidable income from the market, ensuring a comfortable and enjoyable retirement.