High-Yielding Stocks Are Often Too Good to Be True. Not These.

In a low interest-rate world, the promise of a 7%-plus dividend yield sounds too good to be true, and with most stocks it usually is. But there’s a corner of the market where rich dividends are attractive and arguably underpromoted. Welcome to the world of business development companies.

BDCs are a public play on private credit. Created by Congress in 1980 to spur investment in small and midsize private businesses, BDCs raise capital from investors to purchase portfolios of debt and equity in companies generally valued at…