PSEC
Prospect Capital Corporation
stock NASDAQ

This was very informative, I appreciate it. I did sell all my PSEC earlier today and will look into putting that money elsewhere

Dude, you're on the "dividends" sub, AKA, the "I can't understand a business so i only look at dividend yield percentages " sub. The next most discussed stock today is PSEC, a trash stock only talked about on r/dividends because this sub is attracted to super high yield traps that lose money. The fact that the top comment has zero insight says a lot about this sub, just filled with uneducated.
SPGI is in fact one of the best businesses in the world. The dividend yield is low BECAUSE it is one of the best businesses in the world. In fact buying companies with the LOWEST dividend yields outperform high yield stocks because you're actually buying great business models instead of trash nobody wants and have no future.
The only reason it is down is because of fears of AI disrupting a minority part of the company, the data analytics. Meanwhile, its earnings are at all time highs, and valuations lowest since Covid lows. These fears are way overblown because it assumes people will use chatbots to scrape financial data instead of paying SPGI for curated data. This is totally baseless because not only SPGI sells proprietary data that AI can't even access, AI models actually pay SPGI for their data. An example is, if you're trading commodities with real time supply and demand, AI is not going to be accurate at these niche data, SPGI is almost irreplaceable. And that's only a minority of the business as the core business is actually ratings which is part of an oligopoly. None of that is disrupted by AI.
So you're doing the right thing, you actually looked at financials instead of randomly choosing a high yield stock and assumed that's your income. SPGI will do well long term and a great buy right now, not because of any dividends, but because it is a irreplaceable utility in the financial industry trading at the cheapest levels since the bottom of a crash. At 20x forward P/E, you're making over 5% earnings yield, with room for additional returns from valuation expansion.

The thing youre missing is that the dividend isnt free, it comes out of the share price. when a stock drops from your 3.81 toward 2 while paying a big yield, thats not solid yield despite the drop, the drop is kind of the market saying the thing is worth less and the payout is partly just giving you back your own money.
thats why a sell rating and a high yield live together. the yield looks high because the price keeps falling. so you can collect the monthly dividend and still be down overall if the share price bleeds faster than the dividends add up, which is roughly the PSEC story over the long run.
Buying more to average down only works if you think the underlying business turns around. if its just for the monthly check youre kind of funding your own dividend with your principal. not saying sell, just thats the part the yield number hides.

The share price has been dropping for 4since 2008. PSECis a BDC. they loan money out to other companes. By law BDCs are required to pay out 90% of there earnings as a dividend. For a Good BDC the the yield will be about 9%with some bing a little higher and some bing lower. PSEC is 21% At its current price the PSECs in danger of bing dealisted from the market which will make it difficult to buy and sell stock. Or they will do a reverse stock split which will lock in all the losses permanently and the number of shares you own will be reduced. There are other alternatives to these actions but they are harder and may not solve the issue.
I would recommend selling it and reinvesting the money. A Better choice is to invest in PBDC a ETF that invests only in BDCs. And is actively managed so it hold the what management believe ar the best BDCs. its current yield is 11%. it was about 9% last year but there has been sell off in the market of BDCs which as pushed its yield up.
There is another group. of companies that are also required to pay a high yield. MLPs Master limited Partnerships. The company own and operate oil and gas pipelines and refineries. If have a fund EMO which currently has a yield of 8% and it only invests in MLPs.
The dividend for BDCs is taxed as ordinary income. While EMO is taxed at the qualified tax rate which makes EMO mortal efficient. Qualified dividneds are taxed at the long term capital gains rate which is lower than the ordinary inocme tax rate.

Prospect Capital (PSEC)

This was very informative, I appreciate it. I did sell all my PSEC earlier today and will look into putting that money elsewhere

Dude, you're on the "dividends" sub, AKA, the "I can't understand a business so i only look at dividend yield percentages " sub. The next most discussed stock today is PSEC, a trash stock only talked about on r/dividends because this sub is attracted to super high yield traps that lose money. The fact that the top comment has zero insight says a lot about this sub, just filled with uneducated.
SPGI is in fact one of the best businesses in the world. The dividend yield is low BECAUSE it is one of the best businesses in the world. In fact buying companies with the LOWEST dividend yields outperform high yield stocks because you're actually buying great business models instead of trash nobody wants and have no future.
The only reason it is down is because of fears of AI disrupting a minority part of the company, the data analytics. Meanwhile, its earnings are at all time highs, and valuations lowest since Covid lows. These fears are way overblown because it assumes people will use chatbots to scrape financial data instead of paying SPGI for curated data. This is totally baseless because not only SPGI sells proprietary data that AI can't even access, AI models actually pay SPGI for their data. An example is, if you're trading commodities with real time supply and demand, AI is not going to be accurate at these niche data, SPGI is almost irreplaceable. And that's only a minority of the business as the core business is actually ratings which is part of an oligopoly. None of that is disrupted by AI.
So you're doing the right thing, you actually looked at financials instead of randomly choosing a high yield stock and assumed that's your income. SPGI will do well long term and a great buy right now, not because of any dividends, but because it is a irreplaceable utility in the financial industry trading at the cheapest levels since the bottom of a crash. At 20x forward P/E, you're making over 5% earnings yield, with room for additional returns from valuation expansion.

The thing youre missing is that the dividend isnt free, it comes out of the share price. when a stock drops from your 3.81 toward 2 while paying a big yield, thats not solid yield despite the drop, the drop is kind of the market saying the thing is worth less and the payout is partly just giving you back your own money.
thats why a sell rating and a high yield live together. the yield looks high because the price keeps falling. so you can collect the monthly dividend and still be down overall if the share price bleeds faster than the dividends add up, which is roughly the PSEC story over the long run.
Buying more to average down only works if you think the underlying business turns around. if its just for the monthly check youre kind of funding your own dividend with your principal. not saying sell, just thats the part the yield number hides.

The share price has been dropping for 4since 2008. PSECis a BDC. they loan money out to other companes. By law BDCs are required to pay out 90% of there earnings as a dividend. For a Good BDC the the yield will be about 9%with some bing a little higher and some bing lower. PSEC is 21% At its current price the PSECs in danger of bing dealisted from the market which will make it difficult to buy and sell stock. Or they will do a reverse stock split which will lock in all the losses permanently and the number of shares you own will be reduced. There are other alternatives to these actions but they are harder and may not solve the issue.
I would recommend selling it and reinvesting the money. A Better choice is to invest in PBDC a ETF that invests only in BDCs. And is actively managed so it hold the what management believe ar the best BDCs. its current yield is 11%. it was about 9% last year but there has been sell off in the market of BDCs which as pushed its yield up.
There is another group. of companies that are also required to pay a high yield. MLPs Master limited Partnerships. The company own and operate oil and gas pipelines and refineries. If have a fund EMO which currently has a yield of 8% and it only invests in MLPs.
The dividend for BDCs is taxed as ordinary income. While EMO is taxed at the qualified tax rate which makes EMO mortal efficient. Qualified dividneds are taxed at the long term capital gains rate which is lower than the ordinary inocme tax rate.

Prospect Capital (PSEC)