Does a dividend cut automatically equal a drop in stock price? It ultimately depends on risk-adjusted returns available to investors from other asset classes. In a new whitepaper from Mercer Capital, Travis Harms and Jeff Davis examine the dividend-paying capacity of BDC stocks and the implications of reduced dividends on stock prices. Business development companies are an important and growing source of funding for middle market companies. Along with private equity and other investment funds, BDCs provide billions of dollars of investment capital to private companies in every segment of the economy. The authors also recently attended the 2014 BDC Roundtable, an annual gathering of BDC management teams, investment bankers, valuation firms, and accounting and tax experts.
