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Hercules Capital (HTGC) in Focus on 11.4% Dividend Yield
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In this current backdrop, when the financial sector is facing turmoil due to the regional banking crisis and probable recession in the near term, investors must keep an eye on high dividend-yielding stocks. Today, we are discussing one such stock – Hercules Capital, Inc. (HTGC - Free Report) .
This Palo Alto, CA-based business development company provides venture capital to technology and life science-related companies. HTGC’s clients include selected publicly listed companies, privately held companies backed by leading venture capital, private equity firms and lower middle-market companies.
Hercules Capital is treated as a regulated investment company (RIC) for income-tax purposes. To maintain its RIC status, it distributes almost 95% of its taxable income. In February, the firm raised its dividend by 8.3% to 39 cents per share. In the past five years, the company increased its dividend 12 times, with an annualized dividend growth rate of 3.1%.
Considering last day’s closing price of $13.72, HTGC’s dividend yield currently stands at 11.37%. This is attractive for income investors as it represents a steady income stream.
Should you keep an eye on Hercules Capital stock to earn a high dividend yield? Let’s check out the company fundamentals to understand risk and rewards. This will help us make a proper investment decision.
HTGC has been witnessing steady growth in total investment income. While the same declined in 2021, it recorded a five-year (2019-2022) CAGR of 13%. The company is expected to continue witnessing a rise in the metric in the quarters ahead, given the regulatory changes and rising demand for customized financing amid the challenging macroeconomic backdrop. Our estimates for total investment income suggest a CAGR of 14% by 2025.
We are encouraged by the company’s focus on its credit performance. In 2022 and 2021, it originated $3.13 billion and $2.6 billion, respectively, in new debt and equity commitments. Driven by the rise in demand for customized financing and a robust deal pipeline, total new commitments are expected to keep increasing.
The fair value of Hercules Capital’s total investment portfolio was $3.13 billion as of Mar 31, 2023. As of the same date, the net asset value was $10.82 per share.
Though the near-term challenges and rising expenses are headwinds, HTGC will keep witnessing robust loan origination volume going forward. This will support its financials.
So far this year, shares of Hercules Capital have gained 3.7% compared with the industry’s rally of 1.9%.
A couple of other finance stocks, like Associated Banc-Corp (ASB - Free Report) and Invesco Ltd. (IVZ - Free Report) , are worth a look as these have robust dividend yields.
Considering the last day’s closing price, Associated Banc-Corp’s dividend yield currently stands at 5.36%. Over the past six months, the shares of ASB have lost 34.9%.
Based on the last day’s closing price, Invesco’s dividend yield currently stands at 5.27%. Over the past six months, the shares of IVZ have lost 22.4%.
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Hercules Capital (HTGC) in Focus on 11.4% Dividend Yield
In this current backdrop, when the financial sector is facing turmoil due to the regional banking crisis and probable recession in the near term, investors must keep an eye on high dividend-yielding stocks. Today, we are discussing one such stock – Hercules Capital, Inc. (HTGC - Free Report) .
This Palo Alto, CA-based business development company provides venture capital to technology and life science-related companies. HTGC’s clients include selected publicly listed companies, privately held companies backed by leading venture capital, private equity firms and lower middle-market companies.
Hercules Capital is treated as a regulated investment company (RIC) for income-tax purposes. To maintain its RIC status, it distributes almost 95% of its taxable income. In February, the firm raised its dividend by 8.3% to 39 cents per share. In the past five years, the company increased its dividend 12 times, with an annualized dividend growth rate of 3.1%.
Considering last day’s closing price of $13.72, HTGC’s dividend yield currently stands at 11.37%. This is attractive for income investors as it represents a steady income stream.
Hercules Capital, Inc. Dividend Yield (TTM)
Hercules Capital, Inc. dividend-yield-ttm | Hercules Capital, Inc. Quote
Should you keep an eye on Hercules Capital stock to earn a high dividend yield? Let’s check out the company fundamentals to understand risk and rewards. This will help us make a proper investment decision.
HTGC has been witnessing steady growth in total investment income. While the same declined in 2021, it recorded a five-year (2019-2022) CAGR of 13%. The company is expected to continue witnessing a rise in the metric in the quarters ahead, given the regulatory changes and rising demand for customized financing amid the challenging macroeconomic backdrop. Our estimates for total investment income suggest a CAGR of 14% by 2025.
We are encouraged by the company’s focus on its credit performance. In 2022 and 2021, it originated $3.13 billion and $2.6 billion, respectively, in new debt and equity commitments. Driven by the rise in demand for customized financing and a robust deal pipeline, total new commitments are expected to keep increasing.
The fair value of Hercules Capital’s total investment portfolio was $3.13 billion as of Mar 31, 2023. As of the same date, the net asset value was $10.82 per share.
Though the near-term challenges and rising expenses are headwinds, HTGC will keep witnessing robust loan origination volume going forward. This will support its financials.
So far this year, shares of Hercules Capital have gained 3.7% compared with the industry’s rally of 1.9%.
Image Source: Zacks Investment Research
Hence, income investors must watch this Zacks Rank #3 (Hold) stock, as this will help generate robust returns over time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Stocks Offering Solid Dividends
A couple of other finance stocks, like Associated Banc-Corp (ASB - Free Report) and Invesco Ltd. (IVZ - Free Report) , are worth a look as these have robust dividend yields.
Considering the last day’s closing price, Associated Banc-Corp’s dividend yield currently stands at 5.36%. Over the past six months, the shares of ASB have lost 34.9%.
Based on the last day’s closing price, Invesco’s dividend yield currently stands at 5.27%. Over the past six months, the shares of IVZ have lost 22.4%.