2 BDC Stocks to Buy and Hold That Earn More Than Their Regular Dividends
Main Street Capital (MAIN) and Hercules Capital (HTGC) covered their regular dividends by 130% and 125% respectively in Q2 2026. Both BDCs pay supplemental dividends, but their regular dividends are well-covered, offering yields of 5.9% and 9.9% respectively. The companies are positioned to handle economic downturns, though supplemental dividends may be cut.
How this was made
The 30-second read
Why it matters
Strong coverage ratios suggest dividend stability, likely supporting modest price appreciation for income investors.
Market read
Provides fresh dividend coverage data that may influence income‑focused investment decisions in the BDC space.
What to watch
Higher interest rates could increase loan defaults for BDCs, affecting future income generation.
Background
The article reviews dividend coverage ratios for two business development companies, Main Street Capital (MAIN) and Hercules Capital (HTGC), emphasizing their ability to sustain regular dividends.
Ticker impact
Q2 2026 distributable income covers Main Street Capital's regular dividend by 130%, indicating strong dividend sustainability.
likely modest upside as investors value the strong coverage ratio
The high coverage ratio reduces risk of dividend cuts, making the stock more attractive to income investors.
Q2 2026 net investment income covers Hercules Capital's regular dividend by 125%, showing solid dividend support.
likely modest upside as the coverage ratio reassures income‑focused investors
Strong coverage suggests the regular dividend is secure, which may attract buy‑and‑hold investors.
Market effects
Highlights the resilience of BDCs' regular dividends, potentially boosting interest in the BDC sector.
U.S. income‑focused investors may shift allocation toward high‑yield BDCs.
Limited to investors tracking U.S. dividend‑paying securities.
Counterpoint
Supplemental dividends remain vulnerable; a recession could force cuts, reducing total yield.
Key entities
- CompanyMain Street Capital
Business development company with 130% dividend coverage in Q2 2026.
- CompanyHercules Capital
Business development company with 125% dividend coverage in Q2 2026.
