Private Equity Companies Yield More than 5%

Private equity is usually limited to the very wealthy and large institutions. Fortunately, the average investor can also get in on the action since there are many publicly traded private equity firms. The private equity companies provide working capital to smaller companies that are not publicly traded, in the hopes of improving revenues and earnings with a goal of profiting through bringing the companies public through an Initial Public Offering, also known as an IPO, or just reselling the companies to larger firms. Private equity companies also often provide loans to these companies.

Private equity companies, venture capital funds, and business development corporations are generally considered part of the same investment category, primarily due to the fact that these investment vehicles allow investors to get in on the ground floor of private companies before they go public. Once the companies in the portfolios have an IPO, the returns can be substantial.

A Business Development Corporation, also known as a Business Development Company or BDC, is similar to a publicly traded private equity fund. Many private equity companies are registered as BDCs for tax advantages, generally paying no corporate income tax because at least 90 percent of their income, profits, and capital gains are paid out as taxable dividends to investors.

If you are wondering how you cn invest in these, WallStreetNewsNetwork.com recently updated its list of over 25 publicly traded Business Development Corporations and Private Equity Companies, most of which pay high yields, with yields ranging from 3.4% to in excess of 10%.

One example is TICC Capital (TICC), a BDC that has been paying dividends quarterly since 2004, and yields 11.0%. Last Fall, the company boosted its dividend payout rate by 7.4%. The stock has a price to earnings ratio of 6.2 and a forward PE of 8.6. Revenues for the latest quarter were up 40.6%. The company invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, and common stock of both private and public companies, specializing in technology, media, telecommunications, and medical equipment. The company has invested in NetQuote, Inc., the web-based portal for insurance companies and consumers, StayOnline, Inc. a provider of wireless high-speed Internet access solutions for the lodging industry, and Ai Squared, a manufacturer of assistive technology software which makes the screen magnification program ZoomText.

BlackRock Kelso Capital Corporation (BKCC) which a private equity firm founded in 2005 which specializes in investing in middle market companies with EBITDA or operating cash flow between $10 million and $50 million. The firm has invested in such companies as American SportWorks, Fitness Together, Grocery Outlet, Heartland Automotive Services, InterMedia Outdoors, Pre-Paid Legal Services, Renaissance Learning, and Sentry Security Systems. The stock trades at 12.1 times trailing earnings and 10.2 times forward earnings. It sports a yield of 9.8% and pays its dividends quarterly.

Ares Capital (ARCC) is a private equity company that trades at 11 times forward earnings and yields 9.4%, and THL Credit (TCRD) has a 10.8 forward price to earnings ratio and pays a yield of 8.8%.

A list of over 25 high yield business development companies and private equity firms, which can be downloaded, sorted, and updated, is available from WallStreetNewsNetwork.com. Several of these companies pay dividends monthly and more than a dozen have yields greater than 8%.

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com

10% Yields on Business Development Corporations and Private Equity Funds

Private equity companies, venture capital funds, and business development corporations are usually grouped together in the same investment category. This is mainly due to the fact that these investment vehicles allow investors to get in on the ground floor of private companies before they go public. Once the companies in the portfolios have an IPO, the returns can be substantial.

Private equity firms invest in the equity and often the debt of private companies. Usually private equity investments are available for accredited investors only, but fortunately, there are several private equity funds which are publicly traded that anyone can buy.

A Business Development Corporation, also known as a Business Development Company or BDC, is similar to a publicly traded private equity fund. Many private equity companies are registered as BDCs for tax advantages, generally paying no corporate income tax because at least 90 percent of their income, profits, and capital gains are paid out as taxable dividends to investors.

If you are wondering how common these types of investments are, WallStreetNewsNetwork.com recently updated its list of the publicly traded Business Development Corporations and Private Equity Companies, which lists over 25 of them, most of which, income investors will be happy to hear, pay dividends. The yields range from 2.9% to in excess of 12%.

One example is BlackRock Kelso Capital Corporation (BKCC), a private equity firm founded in 2005 specializing in middle market companies, with EBITDA or operating cash flow between $10 million and $50 million. The firm invests in such companies as American SportWorks, Fitness Together, Grocery Outlet, Heartland Automotive Services, InterMedia Outdoors, Pre-Paid Legal Services, Renaissance Learning, and Sentry Security Systems. The stock trades at 11.8 times trailing earnings and 9.6 times forward earnings. It sports a yield of 10.6% and pays its dividends quarterly.

TICC Capital (TICC) is a BDC that has been paying dividends quarterly since 2004, and yields 11.1%. The stock has a price to earnings ratio of 14.3 and a forward PE of 8.7. The company invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, and common stock of both private and public companies, specializing in technology, media, telecommunications, and medical equipment. The company has invested in NetQuote, Inc., the web-based portal for insurance companies and consumers, StayOnline, Inc. a provider of wireless high-speed Internet access solutions for the lodging industry, and Ai Squared, a manufacturer of assistive technology software which makes the screen magnification program ZoomText.

PennantPark Investment (PNNT) is a business development company that yields 10.3%, and has been paying quarterly dividends since June of 2007. The company invests between $10 million and $50 million in each of its portfolio companies, holding mezzanine debt, senior secured loans, and equity investments. The stock trades at 9.2 times forward earnings. PennantPark invests in such companies as the hot tub and spa manufacturer Jacuzzi Brands Corp., Learning Care Group, Inc. which is owner of one of the largest early education and child care providers La Petite Academy, and VPSI, the world's largest vanpool service provider.

To see a list of over 25 high yield business development companies and private equity firms, which can be downloaded, sorted, and updated, you may want to obtain it at WallStreetNewsNetwork.com. Several of these companies pay dividends monthly and more than a dozen have yields above 8%.

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com