SafetyNet Pro automatically analyzes the dividend safety of more than 800 stocks, including two dividend investor favorites: master limited partnerships and real estate investment trusts.

One area that is not yet rated by the system is business development companies. We are working to include BDCs in SafetyNet Pro, but for now I have to rate them by hand…

PennantPark Investment Corp. (Nasdaq: PNNT) is a New York-based company that lends money to middle market businesses, which are firms generally considered to have between $50 million and $1 billion in revenue.

PennantPark is attractive to investors because of its nearly 17% annual yield and history of no dividend cuts. In fact, it has raised its dividend six times since 2007, though the dividend has remained at $0.28 quarterly since 2011.

PennantPark currently has loans out to 62 companies in a diversified mix of industries – though 5% of its portfolio is in oil and gas, and another 5% is in energy and utilities. The largest portion of its portfolio, at 14%, is in the lodging and gaming industry. The total portfolio is worth more than $1.2 billion and the average loan is $20.4 million.

The portfolio, which yields 12.2% for the company, includes…

So how can the stock yield 16.9% if the loans on the company’s books yield only 12.2%?

PennantPark’s stock trades below its net asset value of $9.02 (as of December 31).

In fiscal 2015, which ended September 30, PennantPark generated $82.5 million in net investment income, which is the best metric to measure whether a BDC’s dividend is sustainable. During that period, it paid out $83.3 million in dividends, for a payout ratio above 100%.