Considering how uncertain the investing landscape seems to be, being long in
high-yield sectors is definitely the right place to be. My portfolios are
getting a nice push higher, as evidenced by rising year-end capital flows back
into the equity and debt markets. Each of the major themes that define my buy
lists are playing out well and providing for exceptional high-yield payouts with
long-term capital appreciation. And when you combine the holdings of both
portfolios, it carries a current yield of 8.24% and reflects what I believe are
strong asset classes where our objective goals can be met. Business Development
Within my favorite themes, business development stocks Fifth Street Finance
(NYSE: FSC ), Triangle Capital (NYSE: TCAP ), Hercules Technology Growth Capital
(NASDAQ: HTGC ) and the ETRACS 2X Wells Fargo BDC Index (NYSE: BDCL ) are
firming up nicely. We're still in a very favorable commercial lending
environment where banks remain cautious, allowing business development companies
(BDCs) to prosper by being the primary lender for hundreds of small- to
medium-sized companies that are in hot growth industries. I just love this
business model for the individual investor. It allows passive investors to come
alongside very smart money and make some whopping yields from being a silent
corporate banker getting 15% returns. FSC, TCAP, HTGC, and BDCL all remain buys.
This past week, HTGC the leading specialty finance company addressing the
capital needs of technology-related venture capital and private equity-backed
companies reported third-quarter results. It reported steady growth and strong
fundamentals, posting a 19.9% gain in total investment income. The company
created about $216 million in total commitments to new and existing portfolio
companies. That's a 160% jump from $83 million in the third quarter of 2010.
Total investment assets surged to about $576.5 million year-over-year, a 41.5%
increase. This BDC is perfect for income-seeking tech investors. Another
favorite of mine, TCAP, reported stellar numbers, beating Wall Street estimates
by seven cents, representing a 15% upside surprise. It also bumped up its
quarterly dividend payment to 47 cents from 44 cents per share. This is the
third dividend increase in the past 12 months. Nice! Total investment income was
$16.2 million, which was a 65.7% increase over last year's third quarter. The
surge was thanks to new portfolio investments made during the past two years,
which increased total loan interest. Up on the Farm The secular bull market for
nitrogen fertilizer to meet global demand for corn also is unfolding according
to plan:
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