Daily Stock Pick for August 11, 2023

I love recommending high-yield income plays on Friday.

There’s something about highlighting a stock that can give you passive income right before a well-earned break that feels right.

So, today’s pick is a pure income play with a yield that’s approaching 11%.

But it’s not a stock.

Instead, it’s an ETF – but one you probably haven’t heard of.

That’s because it focuses on a very specific niche of the stock market – a niche which allows them to generate high yields in the current market environment.

So, before you shut down for the weekend…

VanEck BDC Income ETF (BIZD)

The VanEck BDC Income ETF is an ETF that invests in Business Development Companies, or BDCs. In case you were wondering what BDCs are, they’re essentially publicly-listed funds that invest in mostly private small and medium-sized enterprises. Such investments can be in the form of equity or debt.

This ETF primarily gives you exposure to the 10 largest listed BDCs in the US. That’s not a huge amount of diversification – but considering that BDCs are fairly niche anyway, provides a nice diversification cushion in what can be a risky investment vehicle (as BDCs typically employ significant leverage to make their investments).

The macro environment is currently supportive of BDCs, who are generally able to borrow money at fixed rates while lending them at floating rates. Plus, the past few quarters have seen BDCs increasing their dividends on the back of record earnings.

I believe this trend will continue – making it a good time to get some diversified exposure to high-yield BDCs.

To your wealth,
Felix @ Ace of Investing