EPR Properties and Capital Southwest offer monthly dividends with average yields near 10%, providing reliable income amid market volatility. EPR trades at a forward P/AFFO of 9.25x, with a 7.3% yield, strong fundamentals, and a strategic shift away from theaters supporting long-term growth. CSWC, yielding 11.94%, benefits from a premium to NAV, low leverage (0.89x), robust undistributed taxable income, and no debt maturities until 2028.

Capital Southwest (NASDAQ:CSWC) pays a 10.6% dividend yield, and that number tends to stop income investors in their tracks.

Currently, BDCs provide very high-yield opportunities. The fact that additional interest rate cuts are unlikely to happen this year should theoretically support the existing levels. Yet for most BDCs, the damage has already been done.

Here is how Capital Southwest (CSWC) and Sierra Bancorp (BSRR) have performed compared to their sector so far this year.

Capital Southwest and NNN REIT offer high yields of 6–11% with strong balance sheets and diversified income streams. CSWC, an internally-managed BDC, has a 90% first-lien loan portfolio and a low expense structure. NNN REIT delivers stability with a 5.7% yield, 36 consecutive years of dividend increases, 98.3% occupancy, and a low forward P/FFO.

Retirement income portfolios should prioritize meaningful dividend yields to avoid principal drawdown. Predictable and frequent cash flows, ideally monthly, are essential for reliable retirement income. Stress-free investments are key to minimizing worry during adverse economic conditions and avoiding income cuts.

In February, I focused almost exclusively on beaten-down BDCs like Ares Capital, Owl Rock Capital, and Hercules Capital amid macroeconomic turmoil. The portfolio's average yield on cost for new investments was approximately 7.5%, with $65 in annual net dividend income added—below my informal monthly target. Dividend income reached a February record of $533, up 5% YoY, but BDCs now account for 27% of YTD dividends, raising concerns about potential dividend cuts.

Ares Capital Corp. (ARCC) and Capital Southwest Corp. are top BDC picks, offering >10% yields, skilled management, and strong financials. Low leverage and above-average ROE, not P/NAV discounts, are critical for BDC selection and risk mitigation. Current market fears around private credit stem from asset quality doubts, leverage risks, and potential systemic contagion.

I see compelling value in floating-rate preferred shares and baby bonds, especially as credit spreads widen and many now trade at discounts to call value. Recent market volatility and higher interest rates have created attractive entry points in select REITs, BDCs, preferred shares, and baby bonds. I've allocated a significant portion of my portfolio to preferred shares and baby bonds in March 2026.

There is no shortage of BDC bear arguments. Yet, as a BDC bull, I have to say that, arguably, the most critical risk remains overlooked. In the article I discuss this risk in detail (it might make you bearish).