Sometimes Main Street is Profitable

Easy Income Strategy on Main Street

It saddens me to drive through a small city or town and see a downtown main street that is dead or dying. There are many reasons for this, but certainly one of them is the competition that smaller communities and businesses face. However, there are opportunities for smaller businesses to thrive in the land of giants. One such business has the name Main Street Capital Corporation.

The current QUANT Rating for MAIN is a “STRONG BUY.” I agree.

A Recent Announcement

Like many of my easy income strategy investments, MAIN is a large holding. I like it because it pays a monthly dividend with a rational dividend yield based on a growing business. MAIN, like several other of our investments, is a business development company (BDC). Here is the good news: not only did the dividend increase, but there is an additional dividend being paid as well.

Main Street announced a monthly dividend increase and a supplementary dividend
Main Street Capital Corporation is a great income investment.

Easy Income Strategy Scores

By now my readers know that I look at things like the Seeking Alpha QUANT Rating, and the ranking of a business by sector and industry. Several BDCs in our portfolio are in the top twenty BDC investments by QUANT score. They include SCM, MAIN, CCAP, SLRC, CSWC, and ARCC. Seeking Alpha makes it easy to spot some winners and to avoid the losers.

Easy Income Strategy MAIN Scorecard
Source: Seeking Alpha

UTMA Accounts

I like MAIN enough to include it in the investments for our grandchildren. Having a monthly dividend creates opportunities to buy more investments for them as the cash pile increases.

Main Street Capital Corporation REVENUE is growing.
Main Street Capital Corporation earnings per share growth

Company Profile Reveals Wonderful Diversification

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.

Recommendation

As always, diversify your investments. If you are in retirement, it certainly doesn’t hurt to have investments that pay you monthly. Those types of investments can help you stay the course when everyone else is selling because of the most recent bad news. Some good monthly dividend investments include O, ADC, GAIN, HRZN, MAIN, SCM, SLRC, and STAG.

Full Disclosure

Cindie and I own a combined total of 3,100 shares of MAIN in our IRA and ROTH accounts. These shares are worth over $125,000, making MAIN one of our biggest investments.