PennantPark Investment Corp (NSDQ: PNNT) is a business development company (BDC) that principally finances highly leveraged mid-size companies that don’t have access to the capital markets.

Despite the risk inherent in its strategy, management proved its underwriting prowess during the 2008-09 Great Recession. In fact, PennantPark was one of only two BDCs that didn’t cut its dividend during that time period. Even better, it actually raised it!

A majority of PennantPark’s portfolio is comprised of subordinated and second lien debt, with smaller allocations to senior debt and equity. While subordinated debt involves greater risk than debt that’s higher up in a firm’s capital structure, it’s also what powers this BDC’s impressive payout.

And the seasoned management team running the portfolio won’t stretch for deals in which it lacks confidence. Management’s willingness to idle capital until it finds the right scenario means that it won’t be chasing deals that entail excessive risk for a questionable payoff.

The success of this approach is evidenced by PennantPark’s impressive underwriting record: It’s suffered only seven non-accruals out of 224 investments since the company’s inception in early 2007.

While the Wells Fargo BDC Index (WFBDC) is at a 52-week high, PennantPark is off almost 8 percent from its trailing 12-month high, which it hit in mid-March. That offers an attractive opportunity to build a position in a company that’s devoted to a steady, growing dividend.

With a yield of 9.9 percent, PennantPark Investment Corp is a buy up to 11.50.