Daily Stock Pick for August 29, 2023

Yesterday, I highlighted three unusual stocks I believe have the highest potential to continue surging this week.

Today, I want to spotlight a dividend “unicorn” – a stock that’s currently paying a 10%+ dividend yield…

AND has seen its share price rise by nearly 30% this year!

That’s right. In most cases, that kind of yield comes from a declining stock price which artificially raises yield.

But that’s not the case for this dividend “unicorn”.

On top of that, this stock has actually defied the current market pullback – having risen by 6% in the past month.

I consider this a time-sensitive opportunity. The longer you wait, the more expensive the stock could get – and the lower the yield you could capture.

Capital Southwest Corporation (CSWC)

CSWC is a Business Development Company (BDC) – a public company that invests in small and medium-sized companies through both debt and equity. I’ve featured a few BDCs on this newsletter before, but CSWC’s recent performance has been something special.

As I said, its share price is up nearly 30% on the year and it’s still paying a 10+% dividend yield. And it’s not stretching itself to pay that dividend either – dividend payments make up less than 85% of its total Net Interest Income. As such, CSWC has a well-regarded history of both continually raising its regular dividends as well as paying out special dividends.

From a risk perspective, CSWC’s portfolio is well-diversified across many different industries, with it holding almost exclusively first-lien investments in its credit portfolio. And while lower interest rates would put pressure on its income, Fed Chair Powell’s commitment to “higher for longer” interest rates indicates that the near-term future at least is positive for CSWC.

In short, CSWC is one investment that could hand you both a hefty yield – and strong capital gains – for at least the next year or so. But if you want to seize this opportunity, act fast.

To your wealth,
Felix @ Ace of Investing