Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

You Don’t Have to Play Mahjong with Mrs. Zuckerberg

Many investors would love the opportunity to get in on the early stages of exciting new companies. But unless you play mahjong with the mother of the next Mark Zuckerberg (Founder and CEO of Facebook), or you’re otherwise well connected, learning about these opportunities can be difficult.

BDCs allow the everyday investor to get involved with a portfolio of companies, spreading out the risk and very often paying a nice income stream.

For example, Main Street Capital Corporation (Nasdaq: MAIN) is a $500 million market cap BDC that, as of December 2011, paid a yield of about 8.2%.

It makes both equity and debt investments and has a wide variety of companies in its portfolio, including:

• Hydratec Holdings, LLC, a Delano, California, manufacturer of micro-irrigation systems for farmers
• River Aggregates, LLC, a Porter, Texas, sand and gravel supplier
• Ziegler’s New York Pizza Department, a Phoenix, Arizona, pizza chain

Many BDCs pay a robust yield, but as with any investment, there is no such thing as a free lunch. (Unless you’re an investor in Main Street; maybe Ziegler’s hooks you up with a free slice of pizza. I don’t know, but it’s worth a shot.) The higher the yield (or potential reward), the higher the risk. So if you’re considering investing in a BDC with a high yield, do your homework on the company, see how consistent the dividend has been, and try to ascertain whether it will be sustainable.

Doing that might not be as easy ...