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AINV for yield



November 17, 2013 – Comments (7) | RELATED TICKERS: GE , T , AINV

Since I still am a believer that "Yield is King" I can't urge people enough to buy AINV.  It is an inexpensive BDC that took a beating along with many others during the crash.  However it has made tremendous strides in improving its "book."  It reinstated its dividend and currently pays .80 annually.  As time goes by this yield should increase.  Personally I am a strong fan of MLPs and BDCs.  MLPs give you unique beneficial tax treatments and BDCs are required to return 90% of its income back to the shareholder.

With Aunt Janet in control of the Fed we will have years of low interest rates.  While she might start to taper sometime in 2014 she will still keep the Fed funds rate where it is.  So do you want to lock up your money in a CD paying 1% or invest in a company that currently pays over 9% with expected payout increases over the years.

An alternative is to sell the June 2014 $10 puts, currently bid/ask at 1.30/1.50.

7 Comments – Post Your Own

#1) On November 18, 2013 at 12:28 AM, HarryCaraysGhost (62.11) wrote:

It's late on a Sunday (Bears win woohooo!)

So I'm not going to say anything intelligent here, which aligns perfectly with all of my previous posts.

What are your thoughts on FSC over AINV?

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#2) On November 18, 2013 at 1:45 AM, jiltin (47.31) wrote:


I am presently watching the three stocks you have mentioned including ainv. 

 What is the best time to buy? I know it is tough to ask/answer. 

Let me put this way, I am waiting for oportunity. Dec middle FOMC meeting is there. Normally market is low during that time. Above all, dec end, many rebalance stocks and selling is high. In addition, Jan 2014 budget discussion. "The agreement funds the federal government in place of an annual budget through Jan. 15, 2014 and lifts the debt limit through Feb. 7, 2014"

Hence, I am planning to invest sometime in Jan 2014. As of now, I closed all my trading for this year due to uncertainity in near future.

Let me know whether this right or wrong, such waiting... 




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#3) On November 18, 2013 at 10:05 AM, FleaBagger (27.47) wrote:

I'm not saying you're wrong, but I am having flashbacks to when I said the same things about ACAS in early 2008.

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#4) On November 18, 2013 at 10:18 AM, FleaBagger (27.47) wrote:

Here's the May, 2008 blog I wrote (when I was a cocky S.O.B.) right before ACAS plummeted more than 90% -

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#5) On November 18, 2013 at 11:19 AM, Schmacko (91.11) wrote:

I guess if I'm going to be in a BDC I'd rather be in one that pays out monthly like PSEC or MAIN.  I own PSEC.

Also for anyone looking into BDCs remember that their dividends are taxed at the normal income tax rate and not at the dividend tax rate, so its better to buy them in a tax advantaged account like an IRA.

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#6) On November 18, 2013 at 12:25 PM, awallejr (39.43) wrote:

Harry FSC is one I haven't really followed so can't really comment. It pays monthly. I have PSEC instead for monthly payment.

And Flea I hear you on ACAS back in 2008 but that year was a historically unique year. Obviously the best time to have bought that was March 2009 at 70 cents.  But 70 cents to almost $15 is a heck of a comeback.  I have been selling puts in it as per my "Put Play" thread. Closed out my January 2014 $15 and sold the 2016 ones.

I have been growing my AINV position for awhile now and have urged this in several threads by others.  I am only going to be listening to me now concerning predicting what the FED will do. Since I have been pretty good at reading Uncle Ben I think I can do the same with Aunt Janet. She will not reverse course for quite some time.  She might start to taper 2nd half of 2014 ONLY if the data warrants it.

Interest rates are not going to skyrocket any time soon.  So if you are a nervous Nellie you can always get a little over 1% in a CD.

And Jiltin you really need to extend your time horizon.  You should create a core position with 4 to 5 stocks as a start.  While price is important it won't really matter as you add to those positions over time.  I also suggest using stocks that give yield because it is that income stream that allows to re-invest.  AINV is a good one because it is at an attractive price and I expect it to grow the dividend which should help grow capital appreciation.

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#7) On November 18, 2013 at 11:18 PM, jiltin (47.31) wrote:

Awallejr, I understand core part, picking few. ACAS 70 cents to almost $15 is a heck of a comeback, impressive and scary.

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