Wow. Just wow. Not only has this market rally continued to forge on, but it has broadened out, too. After a 14.5% gain in the first half of this year, the S&P is putting together an impressive July with a better than 3% gain so far. I like Main Street Capital Corp. (MAIN) here, explains Tom Hutchinson, editor of Cabot Dividend Investor.
The latest leg of this rally has been sparked by a better-than-expected June CPI report. Interest rate optimism abounds. Consensus now expects a Fed rate cut before the end of the year and an increased expectation that overall interest rates have peaked and are likely to trend lower for the rest of the year.
The better interest rate news prompted a big rally in the worst performing dividend stocks. Real Estate Investment Trusts (REITs) in particular have come on strong in the last week-plus. Now, the market is firing on all cylinders. What’s not to like?
Still, I’m scared bullish. I thought that interest rates hovering near the highest levels in two decades would spoil the party. But it hasn’t. However, some skepticism lives on. Over several decades I’ve learned a truth about markets: When things seem really bad, they’re not that bad. And when things seem really great, they are actually not that great.
Main Street Capital Corp. (MAIN)
As for MAIN, some of the best income stocks are rallying again and picking up the slack from the technology sector. This Business Development Company (BDC) pulled back somewhat after making a high in early May, but it moved higher again in June and made a new 52-week high last week.
It’s still in an uptrend that began last fall and has been steady for weeks. MAIN paid the regular monthly dividend of $0.72 per share in the second quarter, marking a 6.7% increase year-over-year, as well as a $0.30 supplemental dividend. The current yield is around 5.5% because I only include the regularly scheduled dividend. Including the supplemental dividends, the yield is 7.9%.
Recommended Action: Buy MAIN.
