Prospect Capital is a cheaply-priced high-yield dividend stock

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on Jun 3, 2022
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  • Prospect Capital invests in private equity and debt instruments for microcap public businesses.
  • The company has a low PE of 3.69 and a high dividend yield of 9.28%.
  • The stock is a recommended buy as the price is projected to rise to $9.

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Prospect Capital Corporation (NASDAQ:PSEC) is a stock that investors should be considering. The company is trading at $7.72. We think it is at a significant support level. From here, the stock is likely to gain towards a valuation of $9.

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The company operates in the financial investment business. It invests in private and microcap public businesses through lending and equity investments. Certainly, there is not much to sing home about the business segment. However, analysis of other fundamental strengths shows good reasons why it is a buy.

Prospect Capital Corporation has an EPS of $2.20. This brings the PE to 3.69. The company can be considered cheaply priced because of the PE and price of below $10. Another notable strength for the company is the dividend.

The company’s dividend per share of $0.72 equates to a 9.28% dividend yield. We think Prospect Capital is good for dividend investing, and it is priced low. Zacks Research also rates the stock a buy. We think that the price chart provides further signals why the stock is recommendable.

Prospect Capital trades between $7.70 and $9

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Source – TradingView

Technical analysis shows the company on a bullish trend. The company’s valuation has a support level of $7.70 and resistance at $9. From the current level, the stock would rally gradually to the resistance level.

If the price moves as projected, investors would expect at least 16% in market returns. This is in addition to the dividend yield.

Summary

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This analysis recommends buying Prospect Capital. The stock is good for dividend investment. It is also priced attractively, and the price is expected to gain towards a valuation of $9.

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