10-18-2014, 12:37 PM
(10-18-2014, 11:23 AM)Joey Batz Wrote: Maybe it's because I'm not particularly good with charts and graphs, but I can't understand a thing in those.
I looked up MAIN. It's similar to PSEC in what they do, right?
The orange line is the annual earnings per share. The pink line is the annual dividends per share. The black line is the monthly price.
When the black line is above the orange line, the price is considered to be over valued, i.e. relatively expensive. Conversely, when the black line is below the orange line, the price is considered to be under valued, i.e. relatively inexpensive.
When the pink line is above the orange line, the dividend is greater than earnings. If this continues for long enough, the business is not sustainable.
Comparing the two charts, you can see that MAIN is generating sufficient earnings to pay its dividend and GOOD is not.
The second half of each report is a dividend cash flow analysis and comparison to the S&P 500. For the time periods measured, GOOD generated less return based on price appreciation plus dividends paid but not reinvested, than the S&P, and MAIN generated more return.
MAIN and PSEC are both business development companies and are constrained by statute to invest in similar ways. However, there is plenty of latitude within those constraints, and if you take a detailed look at both you will see that MAIN conducts their business much more conservatively than PSEC, taking much less risk with investors' money, and as a result, they generate a much higher total return.
I suggest you read the research published by BDC Buzz on Seeking Alpha.