Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor.
The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.
Business development company Prospect Capital (NASDAQ:PSEC) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 21.3% year on year to $166.9 million. Its non-GAAP profit of $0.17 per share was 33.9% above analysts’ consensus estimates.
Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. Market leaders have certainly capitalized on a favorable backdrop to boost profitability,
helping fuel a 9% gain for the industry over the past six months.
This performance has closely followed the S&P 500.
Extreme high-yielders seem appealing on the surface, but dangers lurk underneath the surface which could jeopardize the dividend payouts in the future.
High dividend stocks are naturally appealing on the surface, due to their high dividend yields. But income investors need to make sure they do not fall into a dividend ‘trap’.
Like a partner who has burned you before but is trying to change, Prospect Capital is still hard to trust. The stock is very popular with income investors because of its 13.2% yield, its low share price, and the fact that it pays a dividend monthly.
Corporate bonds offer yield opportunities and diversification away from equity investments. Investment-grade bonds are safer but lower yield, while high-yield bonds offer higher returns but from riskier firms.
