Don't Collect Cash, Invest For Cash Flow With Big Dividends

More money has been lost waiting for a market crash than in the crashes themselves.

This old saying endures because investors keep relearning the lesson the hard way. Capital gets parked in cash, and your confidence grows that a correction is imminent. Time quietly passes. That cash doesn’t grow, earns meagre interest, collects no dividends, and inflation chips away at purchasing power. When volatility finally arrives, believe it or not, many investors hesitate instead of acting.

Don’t get me wrong. Cash has a role, but waiting in cash is not a strategy. A better approach is staying invested in assets that pay you while markets sort themselves out. Reliable cash flow allows investors to remain patient, reinvest opportunistically, and avoid the pressure of market timing. 

We will now discuss two such income-focused investments to enrich your portfolio with steady cash, enabling you to be a buyer across market conditions. Let’s dive in!

1. CSWC: High-Quality Income From a Premium BDC (Yield: 10.1%)

Capital Southwest (CSWC) is a Business Development Company that has separated itself from much of the sector through consistent income and disciplined portfolio management. Unlike many high-yield vehicles, CSWC has kept net asset value relatively stable while paying substantial dividends. In many ways, CSWC has become a less expensive version of the premier BDC – Main Street Capital Corp (MAIN)

CSWC’s portfolio focuses on lower middle-market companies, typically with EBITDA between $3 million and $25 million. These businesses often pay higher interest rates and have meaningful growth potential. CSWC primarily lends via first-lien debt, with a small equity sleeve for upside.

While supplemental dividends benefited from higher interest rates, those extras may fade as rates normalize. The core monthly dividend, however, appears well-supported and positioned for gradual growth. We expect the $0.1934/share regular monthly dividend to be sustainable even with lower rates, and over time, we expect the regular dividend will continue to be raised periodically.

2. SCAP: Income and Exposure to Undervalued Small Caps (Yield: 6.7%)

Virtus InfraCap Small Cap Income ETF (SCAP) offers diversified small-cap exposure with an income overlay. The actively managed ETF combines equities, preferred stocks, modest leverage, and selective options writing strategies to enhance cash flow.

SCAP’s sector exposure leans toward banks, mortgage REITs, and financials, which represents 33% of the portfolio. Despite this, the ETF is moderately diversified, and its performance has tracked closely with other small-cap value strategies, providing both income and market participation.

We are very bullish on small-cap stocks relative to large-caps. Large-cap stocks trade near historical extremes, while small caps remain below average. Rather than trying to time that gap closing, SCAP allows investors to collect income while waiting for mean reversion.

Conclusion

At High Dividend Opportunities, we like to give you the advantage of Being Paid to wait.

Markets will do what they always do: surprise investors and make them uncomfortable. Whether the next chapter brings a correction, a rally, or prolonged volatility, sitting in cash guarantees one outcome: missed income.

Investments like CSWC and SCAP don’t require perfect timing; they generate cash flow today, provide flexibility tomorrow, and allow patience to work in your favor. When you get paid to wait, time stops being the enemy—and starts becoming an asset. This is the beauty of Income Investing.