Medley Capital (
) stands out for its whopping 10% dividend yield.
The company, which makes loans to small and midsize
businesses, went public in January 2011 and has since more than
doubled its quarterly dividend to 36 cents a share.
Meanwhile, the stock soared 39% this year, far outpacing the
New York-based Medley is a business development company, or
BDC. The industry is growing quickly by helping companies
underserved by big banks to fund growth and refinance debt.
Profit for the company's fiscal first quarter through December
is seen rising 29%. That's respectable, but it would mark the
third straight quarter of slowing earnings growth after a 210%
jump in Q2 of last year.
Revenue has risen by triple digits in the past three
Medley is in the 90-member Finance-Investment Management
industry group, which was ranked No. 41 out of 197 as of Monday.
Rivals within the group includeFinancial Engines (
Medley is working on a flat base with a potential buy point at
14.84. It may also be forming a handle. The stock's Relative
Strength line is near a high and its Accumulation-Distribution
Rating is B, indicating net positive demand for the shares.
Medley earns money from the interest on loans it makes. Its
holdings consist mostly of senior secured first- or second-lien
debt. Holders of first-lien secured debt get paid first if a
company liquidates. Second-lien debt holders get second
Medley also profits from capital appreciation on the equity it
owns in companies that offer it warrants in return for funds. The
warrants give Medley the option to buy a company's stock at a
fixed price. As a regulated investment company, or RIC, Medley is
required to pass profits on to shareholders.
Medley invests in a wide range of sectors, helping to reduce
the risk of a downturn in any one. The largest investments are in
the consumer finance, leasing, retail, energy and aerospace
Profit is seen rising 11% in 2013 after more than doubling in
2012. Pretax profit margin was a robust 52.8% in 2012.