Invesco California Value Municipal Income Trust (NYSE: VCV) and Golub Capital BDC (NASDAQ:GBDC) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Profitability

This table compares Invesco California Value Municipal Income Trust and Golub Capital BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Invesco California Value Municipal Income Trust N/A N/A N/A
Golub Capital BDC 58.06% 7.90% 4.06%

Dividends

Invesco California Value Municipal Income Trust pays an annual dividend of $0.64 per share and has a dividend yield of 5.0%. Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.7%. Golub Capital BDC pays out 90.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Invesco California Value Municipal Income Trust and Golub Capital BDC’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Invesco California Value Municipal Income Trust N/A N/A N/A N/A N/A
Golub Capital BDC $137.76 million 8.23 $82.28 million $1.41 13.49

Golub Capital BDC has higher revenue and earnings than Invesco California Value Municipal Income Trust.

Insider & Institutional Ownership

7.5% of Invesco California Value Municipal Income Trust shares are owned by institutional investors. Comparatively, 40.8% of Golub Capital BDC shares are owned by institutional investors. 1.0% of Invesco California Value Municipal Income Trust shares are owned by company insiders. Comparatively, 2.4% of Golub Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Invesco California Value Municipal Income Trust and Golub Capital BDC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Invesco California Value Municipal Income Trust 0 0 0 0 N/A
Golub Capital BDC 0 3 0 0 2.00

Golub Capital BDC has a consensus target price of $19.50, indicating a potential upside of 2.52%. Given Golub Capital BDC’s higher probable upside, analysts plainly believe Golub Capital BDC is more favorable than Invesco California Value Municipal Income Trust.

Risk & Volatility

Invesco California Value Municipal Income Trust has a beta of -0.12, indicating that its share price is 112% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Summary

Golub Capital BDC beats Invesco California Value Municipal Income Trust on 9 of the 10 factors compared between the two stocks.

About Invesco California Value Municipal Income Trust

Invesco Van Kampen California Value Municipal Income Trust (the Trust), formerly Invesco California Value Municipal Income Trust, is a diversified, closed-end management investment trust. The Trust’s investment objective is to seek to provide common shareholders with a high level of current income exempt from federal and California income taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in California municipal securities rated investment grade at the time of investment. The Trust seeks to achieve its investment objective by investing primarily in California municipal securities that are rated investment grade at the time of investment. Municipal securities include municipal bonds, municipal notes, municipal commercial paper and lease obligations. Invesco Advisers, Inc. serves as its investment advisor.

About Golub Capital BDC

Golub Capital BDC, Inc. is an externally managed, non-diversified, closed-end, management investment company. The Company’s investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of the United States middle-market companies. It may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in the United States middle-market companies. The Company seeks to create a portfolio that includes primarily senior secured and one stop loans by primarily investing in the securities of the United States middle-market companies. It generally invests in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. The Company’s investment activities are managed by its investment advisor, GC Advisors LLC (GC Advisors).

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