Advanced Flower Capital: The 7.5% Dividend Yield Haunted By The Specter Of Legacy Loans

Pacifica Yield13.85K FollowersFollow5ShareSavePlay(7min)CommentsSummaryAdvanced Flower Capital has transitioned from a cannabis lender to a BDC, aiming for portfolio diversification, but faces significant legacy risks.AFCG's dividend yield stands at 7.5%, but the payout has been repeatedly cut and is not covered amid falling interest income, rising credit losses, and negative distributable earnings.Cannabis loans comprise the bulk of the portfolio, with 32.6% on nonaccrual, driving a 40% year-over-year decline in interest income and a 51% rise in credit reserves. JillianCain/iStock Editorial via Getty Images Advanced Flower Capital's (AFCG) transformation from a lender to the cannabis industry to a business development company ("BDC") comes with insufficient dividend coverage, falling interest income, and a deep discount to book value. The security completed its This article was written byPacifica Yield13.85K FollowersFollowThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, REITs, and green energy firms.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.