But Before You Rush to Buy Shares

Saratoga Investment Corp announced a hefty dividend increase.

Before you buy shares of Saratoga Investment Corp, don’t be fooled by the big dividend increase. Don’t get me wrong. I am delighted. But you need to look at the dividend payouts from 2020 through this most recent announcement before you have a love affair with SAR. Having said that, if you buy shares, you won’t be buying the ones we own. Here is some basic information about SAR.

The Ex-Dividend Date for the next SAR dividend is December 14, 2022.
Always look at dividend history before buying an investment. Can you handle surprises?

What is a BDC?

A BDC is a business development company. It is a company that loans money and expertise to smaller non-public businesses. This money can fund business growth or help the business through a difficult time in the business cycle.

What are BDCs? SOURCE: Saratoga Investment Corp.

Why Should Business Owners Care?

Because some businesses can’t get the funds they need or the help they need from a bank. Banks cannot be as hands-on in the business and don’t have the skills to evaluate the risks of some of the loans that businesses seek.

Why Should Business Owners Care? SOURCE: SAR

Why Should Investors Care?

I see BDCs as a great additional way to diversify our investments and get some sweet income in the form of dividends. SAR is in the Financials sector and is in the following Industry: Asset Management and Custody Banks. In other words, SAR is a lender.

Why Should Investors Care? SOURCE: SAR

Weiss Ratings

Weiss Ratings currently rates SAR as a hold, just like Seeking Alpha. If you want shares of SAR, buy them when the price dips.

Weiss currently rates SAR as HOLD. This is a higher risk investment.

Revenue and EPS

Revenue is likely to continue to trend up. Businesses need capital for growth.
EPS are another good metric to review. Are earnings per share increasing?

Company Profile

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. is based in New York, New York with an additional office in Florham Park, New Jersey.

Full Disclosure

I own 700 shares of SAR as a long-term investment in my traditional IRA. It is not the only BDC that we own. Others include GAIN, MAIN, and ARCC. ARCC would be a better fit for most new investors seeking to enter the BDC space. However, buying shares of GAIN, MAIN, ARCC, and SAR can help create even more diversification.

LINK: SARATOGA INVESTMENT CORP