The market has been solid. Indexes are close to the highs, and the S&P 500 Index (^SPX) is up over 12% year-to-date. But there are some issues emerging that may cause a problem in the coming weeks. Main Street Capital Corp. (MAIN) remains attractive regardless, advises Tom Hutchinson, editor of Cabot Income Advisor.
The culprits are oil prices and interest rates. The price per barrel of oil is back up near $90. That helps feed inflation, which puts upward pressure on interest rates. The benchmark ten-year Treasury rate, which determines rates for loans and mortgages, just rose to nearly 4.8%. That was the highest level since the beginning of 2025.
Main Street Capital Corp. (MAIN)
The news isn’t all bad. Earnings were spectacular, as the average S&P 500 company grew earnings by a staggering 50% over last year’s quarter. Corporate profits are healthy, and ultimately stock prices are about earnings. There’s also AI. While that trade has floundered over the last month, it could be rejuvenated soon.
Amid the uncertainty, MAIN is a monthly paying Business Development Company (BDC) that has come back to life over the past couple months. The stock price jumped by over 8% after the BDC reported second-quarter results.
Main reported record net asset value per share, historically a key metric in determining stock price. The quarter also featured an 18.9% return on equity, a strong profitability indicator. The BDC is also continuing to pay supplemental dividends, in addition to the regular dividend – with the announcement of another 30-cent-per-share supplemental distribution this quarter.
Recommended Action: Buy MAIN.
