Blackrock Taxable Municipal Bond Trust (NYSE: BBN) and KCAP Financial (NASDAQ:KCAP) are both financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Dividends

KCAP Financial pays an annual dividend of $0.48 per share and has a dividend yield of 14.2%. Blackrock Taxable Municipal Bond Trust does not pay a dividend. KCAP Financial pays out 320.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Blackrock Taxable Municipal Bond Trust and KCAP Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Blackrock Taxable Municipal Bond Trust N/A N/A N/A N/A N/A
KCAP Financial $32.54 million 3.86 $5.58 million $0.15 22.53

KCAP Financial has higher revenue and earnings than Blackrock Taxable Municipal Bond Trust.

Analyst Recommendations

This is a summary of current ratings and price targets for Blackrock Taxable Municipal Bond Trust and KCAP Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackrock Taxable Municipal Bond Trust 0 0 0 0 N/A
KCAP Financial 0 1 1 0 2.50

KCAP Financial has a consensus target price of $9.75, indicating a potential upside of 188.46%. Given KCAP Financial’s higher probable upside, analysts plainly believe KCAP Financial is more favorable than Blackrock Taxable Municipal Bond Trust.

Institutional and Insider Ownership

19.7% of KCAP Financial shares are held by institutional investors. 8.0% of KCAP Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Blackrock Taxable Municipal Bond Trust and KCAP Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Blackrock Taxable Municipal Bond Trust N/A N/A N/A
KCAP Financial 17.53% 7.44% 3.84%

Summary

KCAP Financial beats Blackrock Taxable Municipal Bond Trust on 9 of the 10 factors compared between the two stocks.

Blackrock Taxable Municipal Bond Trust Company Profile

BlackRock Taxable Municipal Bond Trust (the Trust) is a non-diversified, closed-end management investment company. The Trust’s investment objective is to seek high current income, with a secondary objective of capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in a portfolio of taxable municipal securities, including Build America Bonds (BABs), issued by state and local governments to finance capital projects, such as public schools, roads, transportation infrastructure, bridges, ports and public buildings. It also has the ability to invest up to 20% of its managed assets in securities other than taxable municipal securities. It may invest at least 80% of its managed assets in securities that at the time of purchase are investment-grade quality. It invests in various sectors, including utilities, transportation, education, tobacco, commercial services and supplies, and housing. The Trust’s investment manager is BlackRock Advisors, LLC.

KCAP Financial Company Profile

KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.

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