The S&P 500 hit a fresh record last week. It was the biggest weekly jump since April, showing the market is still strong. But while prices rise, dividend yields are falling to very low levels.
Because yields are near 1%, investors who need regular income are looking elsewhere. One group that is standing out is Business Development Companies, or BDCs. These firms lend money to midsize companies and pass most of the earnings on to shareholders.
BDCs that attract big investors are not just high‑yielding; they also show solid price strength and real business growth. That mix often signals a winning stock.
When a stock moves up on strong fundamentals, it shows that investors are choosing quality income, not just any high yield.
Take Main Street Capital (MAIN). Its price sits above the 21‑day and 50‑day moving averages and follows an upward trend. The stock’s relative strength against the S&P 500 is improving, and momentum tools like the RSI stay in a healthy, bullish range.
MAIN recently lifted its dividend to 5.75%, well above market averages. Its latest earnings beat expectations, and the company reported strong net interest income.
Trading volume also tells a story. When the price holds steady, volume falls, but breakouts happen with higher volume—signs that institutions are building positions.
Another BDC worth watching is Hercules Capital (HTGC). It focuses on fast‑growing, venture‑backed tech and biotech firms, providing senior secured loans.
Hercules posted record investment income for Q2 and benefits when its borrowers go public. One notable portfolio company was Palantir Technologies.
While HTGC shows strong technical signs, it can be vulnerable if the market turns risk‑off. Investors should consider protective stop‑loss orders.
Overall, the hunt for yield is pushing investors toward assets that combine cash flow with growth. Picking securities that show both technical strength and expanding fundamentals will be key to success.
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