Monthly Dividend Increased
Main Street Capital Corporation, a Business Development Company with a market capitalization of over $2.9B, is in the top ten holdings in my traditional IRA account. It is number seven in that account with 1,400 shares. Cindie and I also hold shares in all of our other accounts.
In addition, when the market was running scared in early 2020, I started buying shares of MAIN for the six UTMA accounts I manage for our grandchildren.
Once again, MAIN has increased their monthly dividend and they announced their fourth supplemental dividend for 2022. Investors can reasonably expect monthly dividends from MAIN. Supplemental dividends are less likely to be a dependable source of additional income.
Seeking Alpha QUANT Rating
Seeking Alpha currently has a 3.42 QUANT Rating for MAIN. This is essentially their “Hold” range. In October 2022, MAIN shares were being purchased for $32.60. They are now at $38.78, so you can see that this is a volatile holding. However, the market itself has been even more volatile than MAIN. YTD MAIN is down about 12%, while the S&P 500 index is down 21%. Investors who buy MAIN for income don’t sell their shares when the market is in tantrum mode.
Revenue and Earnings Per Share
The management of the BDC has done a decent job growing both revenue and EPS. Growing both leads to growing dividends. The five-year dividend growth rate for MAIN is 5.26%, and the dividend has been growing for twelve years.
Weiss has a hold rating on MAIN. The “Reward” is good, but the risk is high for the short-term investor. One of the main problems with MAIN is volatility. However, as noted in my comment about the UTMA accounts, buying during times of volatility caused by fear can be very beneficial.
Main Street BDC Diversification
Owning shares of MAIN is, in some ways, similar to owning a specialized ETF. It is better in some ways, as the businesses under the MAIN umbrella are often not available to investors like you and me. They have sector and geographic diversification.
Source for presentation slides: 2nd_Quarter_2022_MAIN_Investor_Presentation.pdf
Company Profile – Main Street Capital Corporation
Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. 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. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $2 million and $75 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $50 million per transaction in debt investment value and in the range of $1 million and $20 million in annual EBITDA. 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 takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.
Cindie and I own a combined total of 3,100 shares of MAIN. It is one of our Top Ten Investments.
Main Street Capital LINK
Main Street Capital Investors Link