A dream stock for long-term divident reinvestment

Prospect Capital Corporation (PSEC) is a business development company (BDC) that focuses on lending to and investing in private businesses. Prospect's investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.  In layman’s language a BDC is a company which can lend money to small companies when they desperately need the cash. As we all know, borrowing money from banks is not easy with a lot of strict prerequisites. Many small companies won’t meet the qualification and they definitely need some alternatives. BDC is one of them to finance their business need. In return, BDCs will get higher interest rates as their income. To be qualified as a BDC, they need to distribute 90% of their income to the investors. That’s why the yield from such stocks are usually quite high. PSEC is one of the best BDCs out there. Prospect has a large and diverse investment portfolio that includes the debt of about 130 companies including Totes Isotoner, Targus, Water Pik, just to name a few. An additional benefit for PSEC is it positive exposure to rising interest rates with 91% of assets floating rate and 100% of liabilities fixed rate. While the long-term interest rate is extremely low at the moment, it is almost guaranteed that it will increase substantially over time, a lot higher from here. In general, higher interest rates are very bad and negative for business as their borrowing cost will increase substantially as well. But not for PSEC since they actually will benefit from increasing interest rates since they can get more income from the loans they have made or to be made. In other words, the investors for PSEC may get more income over time.  To me, this is a dream dividend stock to own for long-term compounding! PSEC is paying 10% annually to investors with a monthly payment. This already yield may further go up if the long-term interest rate moves high. And the monthly compounding is a very efficient way to increase your share base if you set up a DRIP (Dividend Reinvestment Program) for it. As a general rule of thumb, you can double your money every 5 years if you earn 15% annually with compounding.  Just do the math how soon you can double your money from PSEC if it continues to pay you at least 10% in years ahead.