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3 Stocks Paying Investors Big Dividends

By Jordan Wathen - Mar 15, 2014 at 7:00AM

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A discussion on high-yield business development companies and how these stocks might fit in your portfolio.

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 ( ARCC -0.59% ), Prospect Capital ( PSEC -0.58% ), and Main Street Capital ( MAIN -0.85% ) -- 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.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Prospect Capital Corporation Stock Quote
Prospect Capital Corporation
PSEC
$8.49 (-0.58%) $0.05
Ares Capital Corporation Stock Quote
Ares Capital Corporation
ARCC
$20.14 (-0.59%) $0.12
Main Street Capital Corporation Stock Quote
Main Street Capital Corporation
MAIN
$44.06 (-0.85%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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