Last week, one of my favorite income stocks issued a press release with its preliminary third-quarter results. This business development company (BDC) extended its long tenure as the best company and stock in the category. If there ever were a “buy-and-hold forever” stock, this one would be at the top of my list.
Let me show you why…
Congress created the business development company structure to provide debt and equity capital to small-to-midsize corporations. A BDC must, by law, distribute 90% of its net investment income as dividends to investors.
Most BDCs focus on the lending side, making loans to generate relatively stable net investment income. Main Street Capital Corp (MAIN), the stock in question, is different. The company does make loans, but it also owns a significant amount of equity in its client companies. Main Street helps its clients with extensive management support.
Main Street typically announces preliminary quarterly results a few weeks before the release of the official results. The press release says it best, so I have excerpted it…
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