What Is a Business Development Company (BDC)?

By Jason Hall – Updated Jun 2, 2025 at 1:12 PM

Key Points

BDCs provide capital to small and medium-sized firms, offering high dividend yields.
They must distribute 90% of income, leading to frequent large payouts but less reinvestment.
High fees and debt levels are potential risks, but strong interest rates may allow new deals.

A business development company (BDC) is a specific corporate structure for companies that provide capital to smaller and midsize companies, as well as distressed businesses in need of capital. Publicly traded BDCs can be compelling investments, as they give investors of any level of wealth access to strategies like investing in private equity and distressed debt, which are more often associated with the well-heeled.

In addition, BDCs appeal to investors seeking a source of income or a good dividend yield. Because of their structure, they are required to distribute 90% of taxable income to shareholders each year. The downside is that the BDC doesn't retain much of its earnings, so these large distributions can fluctuate from year to year.

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An infographic defining and explaining the term "business development company (bdc)." — Image source: The Motley Fool

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Expense Ratio

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Source: Company filings and other public data as of July 12, 2023.
BDC Name	Trailing Dividend Yield	Total Assets	Market Cap
Ares Capital Corp (NYSE:ARCC)	8.7%	$21.8B	$10.5B
Blackstone Secured Lending Fund (NYSE:BXSL)	9.5%	$9.85B	$4.4B
Blue Owl Capital Corp (NYSE:OBDC)	9.6%	$13.7B	$5.4B
FS KKR Capital Corp (NYSE:FSK)	13.4%	$16.1B	$5.5B
Main Street Capital Corp (NYSE:MAIN)	7.6%	$4.3B	$3.25B
Prospect Capital Corp (NYSE:PSEC)	10.2%	$7.7B	$2.6B

About the Author

Jason Hall is a contributing Motley Fool stock market analyst with more than a decade of experience writing about dividend stocks and long-term investing. He has been with the company since 2012 and previously spent over 10 years in technical sales in the printing and information services industry. Jason also founded and operated a small food manufacturing business.

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Jason Hall has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone and KKR. The Motley Fool has a disclosure policy.