Bargain Alert: I Just Doubled My Position in a Monthly Dividend Stock Yielding 16%

By Sean Williams – Apr 1, 2026 at 8:06AM ESTKey PointsWall Street pullbacks and corrections allow opportunistic long-term investors to pounce on price dislocations. Approximately 99% of this company's $2.33 billion debt portfolio is variable-rate.Exceptional loan vetting and a purposefully diversified portfolio have resulted in a low payment delinquency rate.The last five weeks have served as a stern reminder that even though the Dow Jones Industrial Average (^DJI +2.49%), S&P 500 (^GSPC +2.91%), and Nasdaq Composite (^IXIC +3.83%) have steadily climbed over multidecade timelines, getting from Point A to B is filled with twists and turns. The good news for opportunistic long-term investors is that Wall Street "hiccups" lead to price dislocations. Late last week, one price dislocation became too enticing, leading me to double my position in a monthly dividend stock that's yielding 16%! Investors, say hello to PennantPark Floating Rate Capital (PFLT +3.21%). Image source: Getty Images. PennantPark is an income seeker's dream come true PennantPark Floating Rate Capital is a business development company (BDC), which is a fancy way of saying that it invests in generally unproven businesses (commonly known as "middle-market companies"). While there are risks that come with investing in middle-market companies, PennantPark's management team has done a phenomenal job of covering its proverbial bases. BDCs fall into one of two camps: equity- or debt-focused. Although it closed out December with $275 million in various preferred and common stock positions, PennantPark's $2.33 billion in debt securities make it a predominantly debt-focused BDC. Why debt? The simple answer is yield. Many of the middle-market companies PennantPark has financed have limited access to traditional loans and lines of credit. With few financing options available to these smaller businesses, PennantPark is able to net an above-average yield on the loans it makes. It ended 2025 with a weighted-average yield on debt investments of 9.9% -- more than double the yield of long-term U.S. Treasury bonds. ExpandNYSE: PFLTPennantPark Floating Rate CapitalToday's Change(3.21%) $0.25Current Price$8.05Key Data PointsMarket Cap$798MDay's Range$7.84 - $8.0952wk Range$7.68 - $11.17Volume114Avg Vol1.2MGross Margin77.16%Dividend Yield15.30% What makes PennantPark Floating Rate Capital such an intriguing investment can be found in its name: "floating rate." Approximately 99% of its $2.33 billion loan portfolio sports variable interest rates. Although the Federal Reserve's rate-easing cycle has weighed on PennantPark's weighted-average yield on debt securities, the oil price shock in the wake of the Iran war may result in the central bank completely shifting its monetary policy. If this is the case, PennantPark's loan portfolio is ideally positioned for success. Management also deserves credit for protecting the company's invested principal. Only 0.5% of the company's portfolio at cost was on non-accrual (i.e., delinquent on payments) as of Dec. 31, 2025. Furthermore, PennantPark has spread its $2.61 billion investment portfolio across 160 companies (including its common and preferred stock positions), ensuring that no single investment is imperative to profitability or capable of sinking the ship. To add, all but $20.1 million of its $2.33 billion in loans is first-lien secured debt. First-lien secured debtholders are at the front of the line for repayment in the event that a borrower seeks bankruptcy protection. PFLT Price to Book Value data by YCharts. To round things out, PennantPark Floating Rate Capital stands out as a genuine bargain amid a historically pricey stock market. Although share issuances can weigh on its net asset value (NAV) per share, PennantPark's stock was trading more than 26% below its NAV per share on Friday, March 27. Based on the price I paid for PennantPark's shares, its $0.1025 monthly payout works out to a nearly 16% annual yield. There are few more enticing ultra-high-yield bargains on Wall Street right now than PennantPark Floating Rate Capital.Read NextMar 31, 2026 •By Parkev Tatevosian, CFAStoneco Stock Analysis: Buy or Sell?Mar 31, 2026 •By Eric VolkmanWhy AlTi Global Stock Lagged the Market TodayMar 31, 2026 •By Prosper Junior BakinyIs SoFi a Fintech Winner or a 'Financial Engineering' Story?Mar 31, 2026 •By Leo SunWhere Will PayPal (PYPL) Stock Be in 3 Years?Mar 31, 2026 •By Billy DubersteinIs E*Trade About to Cut Robinhood and SoFi Out of the SpaceX IPO?Mar 31, 2026 •By Matt DiLallo3 Dividend Stocks Paying Over 6.6% That Are Worth a Closer LookAbout the AuthorSean Williams is a data-driven Motley Fool contributing analyst who's been investing for 27 years and has penned north of 15,000 articles. You'll find him at the intersection of politics and investing tackling macroeconomic topics of interest (Social Security and Donald Trump's economic/tax policies), analyzing which stocks billionaire investors (e.g., Warren Buffett) are buying and selling, and digging into how the world's most-influential businesses and trends -- everything from the evolution of artificial intelligence (AI) to the next stock split -- are changing Wall Street. He holds a B.A. in Economics from the University of California, San Diego.TMFUltraLongX@AMCScamStocks MentionedPennantPark Floating Rate CapitalNYSE: PFLT$8.05(+3.21%)+$0.25Dow Jones Industrial AverageDJINDICES: ^DJI$46,341.51(+2.49%)+$1,125.37S&P 500 IndexSNPINDEX: ^GSPC$6,528.52(+2.91%)+$184.80NASDAQ Composite IndexNASDAQINDEX: ^IXIC$21,590.63(+3.83%)+$795.99*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.