Meet the best-managed BDCs offering stable dividends and reliable retirement income.
If you’re a retiree looking for strong monthly or quarterly income without excessive stock market risk, Business Development Companies (BDCs) may be one of the best-kept secrets in income investing.
Designed to fund small- and mid-sized American businesses, BDCs generate high yields by acting like banks—but with one important difference: they pass most of their income directly to shareholders.
And the best-managed BDCs offer retirees:
- Yields in the 8–10% range
- Regular, stable dividends
- Senior secured loans with low default rates
In this post, we’ll explore what BDCs are, why they belong in a retirement income portfolio, and which ones stand out as top picks for reliable, worry-free income.
✅ What Are BDCs? A Quick Primer
BDCs are publicly traded companies that invest in private businesses—usually by making loans or taking small equity stakes. They were created by Congress in 1980 to help support small business growth.
By law, BDCs must:
- Invest at least 70% of assets in U.S.-based private companies
- Pay out 90% of taxable income to shareholders
- Trade on major stock exchanges (easy to buy/sell)
In return for passing through income, BDCs don’t pay corporate taxes—you receive the lion’s share of their profits in the form of high-yield dividends.
✅ Why Retirees Love BDCs
- High Yields: Often 8–10% annually
- Regular Dividends: Monthly or quarterly income
- Floating-Rate Loans: Most BDCs benefit when interest rates rise
- Low Correlation to Stocks/Bonds: Great for diversification
- Income from Real Businesses: You’re helping fuel the real economy
But not all BDCs are created equal. Some stretch for yield and take on too much risk. Others have proven track records of steady income, disciplined lending, and low defaults.
✅ Top BDCs for Retirees
Here are three BDCs known for excellent management, consistent dividends, and strong risk control:
1. Main Street Capital (MAIN)
- Yield: ~6.8% (plus special dividends = effective yield over 8%)
- Dividend Schedule: Monthly
- Why It’s Great:
MAIN is widely considered the gold standard among BDCs. It’s internally managed, avoids excessive leverage, and focuses on high-quality borrowers. Shareholders also benefit from special dividends, boosting total yield.
2. Owl Rock Capital Corp. (ORCC)
- Yield: ~9.5%
- Dividend Schedule: Quarterly
- Why It’s Great:
ORCC is one of the largest BDCs with a diversified loan portfolio and a focus on senior secured lending, meaning it’s first in line to be paid if borrowers get into trouble. It has maintained consistent dividends since inception.
3. Blue Owl Capital Corporation (OBDC)
- Yield: ~9.4%
- Dividend Schedule: Quarterly
- Why It’s Great:
Formerly known as Owl Rock BDC, OBDC is now part of Blue Owl—a major asset manager. It focuses on middle-market loans to profitable, well-established companies. Strong credit quality and conservative management make this BDC retiree-friendly.
✅ Real-Life Example: Margaret’s Monthly Income Plan
Margaret, a 72-year-old retiree, wanted to add more income to her portfolio but didn’t want the volatility of tech stocks or the low yield of bonds. After learning about BDCs, she built a small basket that included MAIN, ORCC, and OBDC.
Today, she receives a mix of monthly and quarterly dividends that total over $850 per month—without having to sell any shares.
“I feel like I’m getting paid to wait,” she says. “And I’m helping support real businesses, not just chasing stock prices.”
✅ The Bottom Line
BDCs can be a valuable part of your retirement income plan—if you choose wisely.
Stick with well-managed, low-leverage BDCs that prioritize:
- Senior secured lending
- Dividend stability
- Long-term performance over short-term hype
With the right BDCs in your portfolio, you can earn 8–10% yields from companies that are literally invested in America’s future.
📘 This post is adapted from my book:
9% Retirement Paycheck: How to Generate Steady, Worry-Free Income for Life,
Available now on Amazon.com in paperback and eBook formats.
Inside, you’ll learn how to combine BDCs, REITs, preferred stocks, and more to create a diversified, income-generating portfolio you can count on—without draining your savings.
⚠️ Disclaimer
This content is for informational and educational purposes only. It is not intended as financial, investment, or tax advice. Investing involves risk, including the possible loss of principal. Always consult a licensed financial advisor before making investment decisions. The author is not a registered investment advisor and does not offer personalized financial guidance.