2 BDCs To Sell Before They Slash Their Dividends

Business Development Companies face mounting risks as exhausted capital structures and poor dividend coverage threaten payout sustainability. Dividend cuts have become prevalent, with market reactions punishing BDCs regardless of existing discounts to NAV. I prioritize BDCs with well-covered, stable dividends over higher-yielding but riskier peers, favoring income stability and NAV protection. Several BDCs, including OBDC, MSDL, and PFLT, have already cut dividends, but some may need further adjustments to align payouts with market realities. In this article, I elaborate on two BDCs that are likely to cut their dividends soon.