Another 10% + Yielding BDC

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
Your Dividend Pro portfolio had a terrific week, with all of your positions rising. Last week’s recommendation, the UBS E-TRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (BDCL), soared 8.26% during its first week in the portfolio. Hospitality Properties Trust’s (HPT) jump of 8.28% more than matched that big gain.
This week’s Dividend Pro pick increases your bet on the Business Development Company (BDC) sector through Apollo Investment Corporation (AINV).
Apollo invests in the debt securities of a diversified range of companies like restaurants, food distribution, healthcare, technology and other industries, primarily in the United States. Since its inception, Apollo invested almost $9 billion in 166 portfolio companies.
Apollo has developed a solid niche for itself, especially since the onset of the financial crisis. Here’s why…
The Fed’s loose monetary policy notwithstanding, traditional lenders are reluctant to get back into the lending game. And thanks to increased regulations, the number of securitizations has tumbled. At the same time, many good companies are unable to raise money to expand in the public debt or equity markets. Apollo is there to help… for a pretty penny.
As a BDC, Apollo is required to distribute at least 90% of its net investment income and net realized capital gains each year. Shareholders receive these profits in the form of a very generous dividend on a quarterly basis. Currently, the stock yields 10.3%.
Apollo Investment Corporation (AINV) also trades below its book value of $8.51 per share. Insiders have been buying the stock recently, which should give you confidence, as well.
So buy Apollo Investment Corporation (AINV) at market today and place your stop at $6.60. For potentially even bigger upside between now and December, I recommend the December $8.00 call options.

Portfolio Update

Hospitality Properties Trust (HPT) soared 8.28% this past week. On July 2, HPT declared a regular quarterly dividend of $0.4375 per share payable on or about August 15, 2012, to holders of record at the close of business on July 31, 2012. Shooting above its 50-day moving average, HPT is now a BUY.
Global X SuperDividend ETF (SDIV) jumped 3.99% as global markets recovered. SDIV allocates less than a third of its country weight to the United States, giving investors an opportunity to exploit the higher yields often offered by global stocks. Trading back above its 50-day moving average, SDIV is a BUY.
Two Harbors Investment Corp. (TWO) rose 3.49%. The $0.40 dividend is payable on July 20, 2012, to common stockholders of record at the close of business on June 22, 2012. TWO is a BUY.
American Capital Agency Corp. (AGNC) recovered 4.37%. You’ll be getting a cash dividend of $0.556 per share on July 16, 2012, paid to preferred shareholders of record as of July 1, 2012. AGNC remains a BUY.
Prospect Capital Corporation (PSEC) jumped 3.36% last week. A private equity firm specializing in late venture, middle market, mature, mezzanine finance, buyouts, recapitalizations, growth capital, development, and bridge transactions, PSEC makes secured debt and equity investments in private and microcap public businesses. Yielding 10.5% and paying dividends monthly, PSEC is a BUY.
iShares FTSE NAREIT Mortgage REIT (REM) recovered 3.52% during the past week. A diversified bet on mortgage REITs, REM is a BUY.
PIMCO Municipal Income Fund II (PML) jumped 2.27% last week. The fund announced a monthly dividend of $.065 payable on August 1, 2012, to shareholders of record on July 12, 2012, with an ex-dividend date of July 10, 2012. This bet on municipal bonds remains a BUY.

UBS E-TRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (BDCL) soared 8.26% during its first week in the portfolio. It remains a BUY

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