Q: Hi,
Your answer today on BKCC & BKCL prompted me to compare BKCC with Blackrock BKCL both of which have high dividends….and I still look for sustainable dividends and some growth. As 5i pointed out with BkCC ( usa) it “ tends” to pay a consistent dividend….BUT the share value has dropped from over $16 to about $3.70 today.
1. What is your best guess on the fate of Horizon’s BKCC over the next 5 years?
2. Given that Canadian banks pay consistent dividends and decent dividends….
again best guess…. would buying BNS, CMO, TD, RY, BMO be more likely to provide a better payoff over the same 5 year period.
Thanks.
Your answer today on BKCC & BKCL prompted me to compare BKCC with Blackrock BKCL both of which have high dividends….and I still look for sustainable dividends and some growth. As 5i pointed out with BkCC ( usa) it “ tends” to pay a consistent dividend….BUT the share value has dropped from over $16 to about $3.70 today.
1. What is your best guess on the fate of Horizon’s BKCC over the next 5 years?
2. Given that Canadian banks pay consistent dividends and decent dividends….
again best guess…. would buying BNS, CMO, TD, RY, BMO be more likely to provide a better payoff over the same 5 year period.
Thanks.
5i Research Answer:
BKCC is $13.85 with a five year compound annual return of 4.22%. About 2/3rd of the distribution historically has been return of capital, and this helps explain some price decay. 1) We would continue to expect BKCC to pay a decent distribution, but it will vary and may decline depending on markets and volatility and rates. 2) This question is essentially a prediction of the sector. If the sector is flat or somewhat weak, the covered call fund will likely do better. In a rising sector, a mix of stocks will do better. We would expect the stocks will do better over a five year period.