SOURCE: The Bedford Report

The Bedford Report

October 28, 2011 08:16 ET

Strong Earnings From Prospect Capital and Ares Capital Could Lead to Greater Dividends

The Bedford Report Provides Equity Research on Prospect Capital & Ares Capital Corporation

NEW YORK, NY--(Marketwire - Oct 28, 2011) - This earnings season, investors will be feverishly watching Business Development Companies' (BDC) bottoms lines, to see if companies such as Prospect and Ares Capital will boost shareholder return. BDCs are well known for their generosity to shareholders -- either in the form of dividend payments or share repurchase. BDCs are usually taxed as regulated investment companies (RIC) under the Internal Revenue Code. As a pass-through tax structure, RICs must distribute at least 90 percent of taxable income as dividends to shareholders. The Bedford Report examines the outlook for companies in the Business Development Company (BDC) Industry and provides stock analysis on Prospect Capital Corporation (NASDAQ: PSEC) and Ares Capital Corporation (NASDAQ: ARCC). Access to the full company reports can be found at:

Several companies in the BDC sector have been raising capital and reducing leverage, giving them better operational flexibility moving forward through the year. The issuance of public debt has been one of the primary means by which the sector has sought to raise capital.

Ares Capital Corporation invests primarily in United States middle-market companies. The Company invests primarily in first and second lien senior loans and mezzanine debt, which in some cases includes an equity component. First and second lien senior loans generally are senior debt instruments. Presently the company pays annual dividend of $1.40 per share for a yield of around 9.4 percent. The company will report third quarter earnings on November 8th.

The Bedford Report releases investment research on the Business Development Company (BDC) Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Prospect Capital pays an annual dividend of $1.22 per share for a hefty yield of around 13.90 percent. Last month the company provided a senior secured loan of $23 million to support the recapitalization of Anchor Hocking, LLC ("Anchor"), a company controlled by affiliates of Monomoy Capital Partners. Separately, Prospect recently provided approximately $12 million in senior secured financing to an existing portfolio company, controlled by an experienced private equity firm, to acquire a leading manufacturer of personnel safety products for the transportation and industrial markets.

Prospect has closed nearly $900 million of new originations during calendar year 2011, including more than $200 million in the current quarter.

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