The staff at DividendChannel.com takes to the charts to review this large Business Development Company’s (BDC) stock to see if it’s suitable for the long-term, since it has a high yield, sells for less than book, and has insider buying.
In this series, we cherry pick only those companies that have experienced insider buying within the past six months. The officers and directors of a company tend to have a unique insider's view of the business, and, presumably, the only reason an insider would choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money—maybe they find the stock very undervalued—or maybe they see exciting progress within the company, or maybe both. So when stocks turn up that see insider buying, and are also top ranked, investors are wise to take notice. One such company is Blackrock Kelso Capital Corporation (BKCC), which saw buying by Director Brian D. Finn.
Back on May 20, Finn invested $170,204.00 into 20,000 shares of BKCC, for a cost per share of $8.51. In trading on Wednesday, shares were changing hands as low as $8.69 per share, which is 2.1% above Finn's purchase price. It should be noted that Finn has collected $0.42/share in dividends since the time of their purchase, so they are currently up 7.0% on their purchase from a total return basis. Blackrock Kelso Capital Corporation shares are currently trading +0.46% on the day. The chart below shows the one year performance of BKCC shares, versus its 200-day moving average:
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Looking at the chart above, BKCC's low point in its 52-week range is $8.25 per share, with $9.89 as the 52-week high point—that compares with a last trade of $8.76. By comparison, below is a table showing the prices at which insider buying was recorded over the last six months:
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The DividendRank report noted that among the coverage universe, BKCC shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent BKCC share price of $8.72 represents a price-to-book ratio of 0.9 and an annual dividend yield of 9.64%—by comparison, the average company in Dividend Channel's coverage universe yields 3.8% and trades at a price-to-book ratio of 2.2. The report also cited the strong quarterly dividend history at Blackrock Kelso Capital Corporation and favorable long-term multi-year growth rates in key fundamental data points.
The report stated, ''Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research.''
The annualized dividend paid by Blackrock Kelso Capital Corporation is $0.84/share, currently paid in quarterly installments, and its most recent dividend ex-date was on September 17, 2014. Below is a long-term dividend history chart for BKCC, which the report stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.
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By the Staff of DividendChannel.com
