In today's episode of Where the Money Is, the Motley Fool's everything-financials show, banking analyst David Hanson is joined by Fool contributor Jordan Wathen to discuss high-yield business development companies and how these stocks might fit in your portfolio.

 Business development companies have taken center-stage as investors turn to high-yield stocks. We'll examine the differences of the three industry leaders -- Ares Capital (NASDAQ:ARCC), Prospect Capital (NASDAQ:PSEC), and Main Street Capital (NYSE:MAIN) -- and see how they create big dividends for investors. From Ares Capital's massive balance sheet to Main Street Capital's investments in "Mom and Pop" businesses, we'll dissect how these companies make money.

Later in the show, a question from the mailbag asks if recent changes to stock market indexes could provide a buying opportunity for BDC investors. Russell and S&P will remove BDCs from their indexes, but will it spell pain, or new opportunity?

Finally, the two discuss opportunities in small caps, and why smaller stocks should be on any investors' radar.

Are BDCs the best dividend bets?
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.



Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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