Main Street Capital
Main Street Capital’s appearance in my TOP 10 should not come as a surprise to my long-time readers. In fact, if you read my post about ARCC, I mentioned MAIN. MAIN is a diversified financial company founded in 2007.
Cindie and I own a combined total of 2,925 shares of MAIN, so those shares are currently worth about $120,000. We hold shares in our brokerage accounts, our ROTH IRA’s and in my traditional IRA. Since 2016, we have received a total of $32,317 in dividends from MAIN. Income from this investment arrives monthly, and I would expect to see total income from MAIN at over $7,000 in 2021. Through the end of May 2021, we have already received $3,087.
Our grandchildren also own shares of MAIN. I bought shares for their UTMA accounts when prices were down due to Covid-19 for $22/share. The shares are worth $41.12. Even the shares I bought to get them started in MAIN in February 2020 have increased in value. Because it is easier to automatically reinvest the dividends, that is what I do for the UTMA accounts. However, I take the cash in all of our IRA and brokerage accounts. This again, is not an investment for nervous investors. There certainly is some risk. The main appeal is the healthy monthly dividend. But this is not a dividend growth investment. Don’t buy shares if you don’t understand the business model.
Why Does MAIN Qualify for the TOP TEN?
Like ARCC, MAIN gives us entry into businesses we would otherwise be unable to purchase or reap a profit from. MAIN invests in businesses in Commercial & Professional Services, Consumer Discretionary, Consumer Service, Energy, Financials, Health Care, Industrials, Information Technology, Manufacturing, Materials, Media, and Telecommunications. When I went to the Main Street web page, I counted 122 businesses in their current portfolio.
In Materials, for example, they have an investment in Clad-Rex Steel, East Teak Fine Hardwoods, and Mid-Columbia Lumber in Culver Oregon. In energy they have invested in a tank services company, an energy maintenance services business, a pipeline services company, and a drilling company. The names of these companies probably aren’t ones you and I would know. Not surprisingly, many of these businesses are located in Houston Tx. In consumer discretionary, one Chicago company is Grand Flower Growers. They supply Home Depot garden centers. When I went to the Home Depot today (Mary 31), the garden center was packed. These are just a sliver of their total investments.
As with many of our investments, MAIN is not a go-go growth company. It is, however, a profitable value company with a growing dividend. For that reason, it fits nicely in our retirement portfolio. It also is a nice unique investment for our grandchildren.
ETN’s Sector, Industry, and Market Cap
Sector: Financials (Private Equity Firm)
Industry: Asset Management and Custody Banks
Market Cap: $2.81B
Headquarters: Houston, TX
Main Street Capital Corporation is a private equity firm specializes in equity capital to lower middle market companies. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It makes majority and minority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas.