Investing

The Single Best Dividend Stock Yielding Over 10%

Trey Thoelcke

Published: July 2, 2024 9:15 am

24/7 Insights

• Investors love dividends, but selecting the right ones can be a challenge.
• Barings BDC Inc. (NYSE: BBDC) could be the single best stock yielding over 10%.

Investors, especially those who are income-focused, love dividends. Yet, choosing the right dividend stocks can be a challenge. A huge dividend may not be sustainable. Or companies in trouble may have to reduce or eliminate even modest dividends. In fact, Dividend Aristocrats, those companies that have not only paid but increased their payouts every year for at least 25 years, sometimes are forced to disappoint investors.

Why Invest in Dividend Stocks?

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Solid dividend stocks provide investors with reliable streams of income and with total return. That is, appreciation of the stock price plus the regular distributions made by the company. Dividends can be a sign of a company’s financial health and stability. A company must be doing well if it can afford a healthy and reliable payout.

With that in mind, let’s have a look at one stock that could be the single best stock yielding over 10%: Barings BDC Inc. (NYSE: BBDC).

Barings BDC, the Company

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The company is an externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later-stage companies. Barings invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services in the United States.

Barings is based in Charlotte, North Carolina. It was founded in summer of 2006, and it went public in early 2007. Competitors include Ares Capital Corp. (NASDAQ: ARCC), Blue Owl Capital Corp. (NYSE: OBDC), and Main Street Capital Corp. (NYSE: MAIN).

First-quarter results fell short of Wall Street expectations on the top and bottom lines, though net assets and net asset value per share increased from the prior quarter, and the company repurchased almost 116,000 shares. Analysts anticipate that per-share earnings will grow about 5% in the next five years. The per-share dividend has grown from $0.10 at the end of 2018 to $0.26 most recently.

The Single Best Dividend Stock Yielding Over 12%

Barings BDC, the Stock

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The share price is more than 23% higher than a year ago, which is a bit higher than the S&P 500 in that time. The stock is up 13% or so since the beginning of the year. Analysts have a mean price target of $10.32, which suggests further upside of around 6% in the next 52 weeks. The high target is $11 per share. The consensus recommendation is to buy shares.

About 45% of shares are held by institutional investors, including sizable stakes at Barings and Ares Management. Note that an insider purchased 27,500 shares back in May.

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