#7 - Horizon Technology Finance Corp. (NASDAQ:HRZN)
For a BDC that provides some exposure to the technology sector, investors can choose Horizon Technology Finance Corp (NASDAQ:HRZN). Tech stocks in general have been battered since late 2021 as investors flew to the safety of other asset classes. And the tech sector may remain under pressure as rising interest rates will give conservative investors a few more options.
However, like every stock on this list, you’re buying HRZN stock for its dividend. And that currently means investors get a 11.20% dividend yield with an annualized payout of $1.20 per share. That’s not too bad for holding on to a stock that is likely to achieve capital growth when sentiment returns. Plus, the company has recently been diversifying into sectors such as medical technology and green technology.
Company management seems to agree as four insiders have been buying HRZN stock in the last 12 months totaling over $369,000.
About Horizon Technology Finance
Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries.
Read More - Current Price
- $9.29
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 3 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $9.63 (3.6% Upside)
One of the limitations of monthly dividend stocks is that they can lack diversification. There are only about 50 companies that pay monthly dividends. And as you can see, many of these companies are REITs, business development companies (BDCs) or master limited partnerships. That means that if you own several of these stocks, they can cause your portfolio to be overexposed to a notoriously cyclical sector. If you want a truly diversified portfolio, you'll want to have exposure to other sectors.
An additional risk of monthly dividend stocks is that companies that pay monthly dividends can be under short-term pressure to deliver results. However, since monthly dividends align more closely with household budgets, the benefit of having exposure to this sector easily outweighs the risk. And if you're an investor that still has a timeframe that allows you to reinvest dividends, monthly dividend payouts accelerate the benefits of compounding.
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