Daily Stock Review: Main Street Capital (MAIN)
This week, I'm seeking a second robust dividend financial services sector representative for my new Ivy portfolio.
Financial Services includes twenty industries ranging from Asset Management to 8 kinds of Banks, Credit, Exchanges, 6 kinds of Insurance, Savings, and all such financial concerns.
Today I'm reviewing a mid-cap asset management company, named Main Street Capital Corp. Its trading ticker symbol is MAIN.
Main Street Capital Corp is an investment firm providing customized debt and equity financing to lower middle market companies and debt capital to middle market companies.
It invests in consumer discretionary, consumer staples, energy, healthcare, industrials, information technology, materials, telecommunication services, and utilities sectors. It does not seek to invest in start-up companies or companies with speculative business plans. It seeks to invest in traditional or basic businesses. The firm primarily invests in companies based in the Southern, South Central, and Southwestern regions of the United States but also considers other domestic investment opportunities.
It typically invests between $2 million and $75 million in equity and $5 million to $50 million in debt, revenue between $10 million and $150 million, enterprise value between $3 million and $50 million, and EBITDA between $1 million and $20 million. The firm seeks to charge a fixed interest rate between 12 percent and 14 percent, payable in cash, in case of its mezzanine loan investments.
Main Street Capital Corporation was incorporated on March 9, 2007, and is based at Houston, Texas.
I use three key data points to gauge the value of any dividend equity or fund like Main Street Capital Corp. (MAIN):
(1) Price
(2) Dividends
(3) Returns
Besides those three, four more keys will finally unlock an equity or fund in which to invest.
But those first three primary keys, best tell whether a company has made, is making, and will make money.
MAIN Price
Main Street's price per share was $37.47 at Friday's market close. A year ago its price was $40.70 for a price drop of $3.23 per share for the year or an 8% downside.
Assuming Main Street's price will trade in the range of $35 to $42 next year, Main Street's recent $37.47 price could maybe climb by $2 and improve to $39.47 by mid-December, 2019.
MAIN Dividends
Main Street's most recent monthly dividend was $0.195 declared October 11th and paying out, December 27th.
That $0.195 monthly stipend equates to an annual amount of $2.34 yielding 6.24% at Friday's closing $37.47 price.
Gains For MAIN?
Adding the $2.34 annual estimated dividend to my estimated $2 annual price upside estimate for Main Street Capital Corp. (MAIN) adds up to a $4.34 potential gross annual per share gain, which will be reduced by costs to trade the shares.
For a little over $1,000.00 invested today at the $37.47 recent price, we would buy 27 MAIN shares.
A $10 broker fee paid half at purchase and half at sale costs us $0.37 per share. Subtract that $0.37 brokerage cost from the estimated $4.34 gross annual gain leaves a net gain of $3.97 X 27 shares = $107.19 for a 10.7% net gain on a $1,011.69 investment.
Therefore, Main Street Capital Corp., whose trading ticker symbol is MAIN, now shows a possible 10.7% net gain including a 6.24% dividend yield.
Six brokers cover this stock:
One says "buy" MAIN shares.
Two think MAIN will "outperform " peers.
Three say "hold" your MAIN shares.
The six brokers reckoned price target, exactly $0.03 over my $39.47 estimate target estimate.
Therefore, you can look at Main Street Capital Corp. (MAIN) and see it has made money, is making money, but could net a 10.7% net annual gain including that 6.24% estimated dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to determine if Main Street Capital Corp. (MAIN) is worth your time and money.
Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, ...
more