Attention income investors: if you’re not paying attention to Main Street Capital (NYSE: MAIN), you’re missing out on a potential gold mine. With a mouth-watering 8% yield (including special dividends) and 11 consecutive quarters of bonus payouts, MAIN is quickly becoming the darling of the income investing world. But is this too good to be true?
Not so fast, says Marc Lichtenfeld, Chief Income Strategist at Wealthy Retirement. In his latest Dividend Safety analysis, Marc digs into the numbers behind MAIN’s generous dividend policy. His verdict? “Main Street is one street you don’t need to take a detour around.”
Marc points to MAIN’s soaring net investment income (NII) as a key indicator of the company’s ability to maintain and even grow its payouts. “In 2023, the company generated $339 million in NII, a 38% increase year over year and an 85% increase over 2021’s total,” he reports.
Even with a payout ratio approaching 80%, Marc believes MAIN is well-positioned to continue rewarding shareholders. “Considering the company is growing its NII, can afford its dividend, and has raised it every year for more than a decade, Main Street is one street you don’t need to take a detour around,” he concludes, assigning the stock an “A” grade for dividend safety.
But here’s where it gets really juicy for us income hounds. If you factor in MAIN’s $0.30 per share special dividends (paid in both March and June this year), the yield jumps from an already-attractive 5.7% to a drool-worthy 8%+. That’s the kind of payout that can help turn your retirement dreams into reality.
Of course, as with any investment, there are risks to consider. BDCs like MAIN are required by law to return at least 90% of their earnings to shareholders, which can limit their ability to weather economic downturns. And with interest rates on the rise, the company’s borrowing costs could start eating into that precious NII.
But if you’re looking for a high-yield play with a track record of delivering for shareholders, MAIN looks like a street worth exploring. Just be sure to do your own due diligence before taking the plunge – and never invest more than you can afford to lose.
Ready to pull the trigger on MAIN? Click here to add it to your portfolio today. Your retirement account will thank you later.
In the meantime, drop a comment below and let me know what other stocks you’d like to see Marc put under the Dividend Safety microscope. The hunt for yield never sleeps!
