Earn 9% From This 'Blue Chip' Stock: Ares Capital

seekingalpha11-09

The difference between a lifelong holding and a seasonal holding is the forethought and quality of the management team.Income through all seasons is essential, not income just only in good times.Keep ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2482245614?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1885026935/image_1885026935.jpg","is_english":true,"pubTime":"2024-11-09 23:30","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2482245614","market":"us","top_or_hot":-1,"title":"Earn 9% From This 'Blue Chip' Stock: Ares Capital","media":"seekingalpha","content":"<div>\n<p>The difference between a lifelong holding and a seasonal holding is the forethought and quality of the management team.Income through all seasons is essential, not income just only in good times.Keep ...</p>\n\n<a href=\"https://seekingalpha.com/article/4734869-earn-9-percent-from-this-blue-chip-stock-ares-capital\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Earn 9% From This 'Blue Chip' Stock: Ares Capital</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEarn 9% From This 'Blue Chip' Stock: Ares Capital\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-09 23:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4734869-earn-9-percent-from-this-blue-chip-stock-ares-capital><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The difference between a lifelong holding and a seasonal holding is the forethought and quality of the management team.Income through all seasons is essential, not income just only in good times.Keep ...</p>\n\n<a href=\"https://seekingalpha.com/article/4734869-earn-9-percent-from-this-blue-chip-stock-ares-capital\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2360032135.SGD","symbol_name":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","start_time":0,"source_url":"https://seekingalpha.com/article/4734869-earn-9-percent-from-this-blue-chip-stock-ares-capital","article_id":"2482245614","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1885026935/image_1885026935.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482245614","pubTimestamp":1731166200,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Building For Income Continuance Ares Capital  yielding 9% is a business development company, BDC. ARCC plays an important role in providing liquidity to middle market companies, which are overwhelmingly privately held and make up the majority of the United States economy. ARCC reported another very strong quarter, with its NAV hitting an all-time high of $19.77. Core earnings slipped slightly from last quarter to $0.57/share. This is something we will see throughout the BDC sector as interest rates decline and the excess due to aggressive Fed policy normalizes. Source ARCC Q3 Presentation ARCC's new commitments outstripped its exits by $1.3 billion as it grew its portfolio by 18% year-over-year. As we look at ARCC's trends, we can see that it has grown its portfolio from 490 companies to 535 companies. ARCC Q3 Presentation ARCC has materially increased its exposure to first-lien senior secured loans, from 43% to 53% of its portfolio, primarily through reducing its exposure to second-li","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC","ARCC":"阿瑞斯","BK4585":"ETF&股票定投概念","LU2125154778.USD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","BK4588":"碎股","BK4135":"资产管理与托管银行"},"translate_title":"从这只“蓝筹股”中赚取9%：Ares Capital","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ARCC":0.9},"content_text":"The difference between a lifelong holding and a seasonal holding is the forethought and quality of the management team.Income through all seasons is essential, not income just only in good times.Keep quality blue chip investments in your sights, don't get distracted by flashy ones.   Tuul & Bruno Morandi/DigitalVision via Getty Images  Co-authored by Treading Softly When building a home, a foundation is pivotal. The structural soundness of a home starts with its contact with the ground and shoddy work here can spell disaster in the future – no matter the skilled craftsmanship that may be added on top of it. It brings me back to the childhood song about \"the wise men built his house upon the rock\" whereas \"the foolish man built his house upon the sand.\" When it comes to building an income portfolio that is designed to produce a lifelong, or at very least retirement-long, stream of income, the foundational steps you take to build it are key. Many would love to have a simplified copy/paste answer to their problem, but your portfolio will need to be as unique as you are. Your risk tolerance, income goals, life situations, and economic situation will drive your portfolio's composition. This is why we provide not just a Model Portfolio to High Dividend Opportunities members but also regular educational articles. It enables our members to not only have a model to use as a tool to aid in the construction of their portfolios but also the knowledge needed to build one to meet their specific needs. Today, we are going to take a look at the recent results of my favorite BDC to hold through a recession and see if their recent earnings provide insight to how management is preparing to protect our income stream, and even see it grow when most BDCs are set to cut their dividends. Let's dive in! Building For Income Continuance Ares Capital (NASDAQ:ARCC) yielding 9% is a business development company, BDC. ARCC plays an important role in providing liquidity to middle market companies, which are overwhelmingly privately held and make up the majority of the United States economy. ARCC reported another very strong quarter, with its NAV hitting an all-time high of $19.77. Core earnings slipped slightly from last quarter to $0.57/share. This is something we will see throughout the BDC sector as interest rates decline and the excess due to aggressive Fed policy normalizes. Source ARCC Q3 Presentation ARCC's new commitments outstripped its exits by $1.3 billion as it grew its portfolio by 18% year-over-year. As we look at ARCC's trends, we can see that it has grown its portfolio from 490 companies to 535 companies. ARCC Q3 Presentation ARCC has materially increased its exposure to first-lien senior secured loans, from 43% to 53% of its portfolio, primarily through reducing its exposure to second-lien assets, while keeping its equity exposure roughly flat at 10% preferred and 9% common equity. ARCC has also slightly increased its exposure to fixed-rate loans to 14%. ARCC's dividend remains extremely well-covered, as unlike many BDCs that opted to pay supplemental dividends, ARCC decided to retain capital and grow book value more aggressively. We expect ARCC's dividend to remain stable, even as earnings moderate. The credit quality of ARCC's portfolio remains stable and continues to moderate after a brief increase of their watchlist last year. Currently, only 3% of ARCC's fair value is in the lowest two rating categories. ARCC Q3 Presentation Additionally, non-accruals have declined back to 1.3% of ARCC's cost basis. ARCC Q3 Presentation In 2023, non-accruals ticked up to 2.3%, and we remember some were worried that ARCC lost its mojo and that credit quality was deteriorating. These are natural gyrations when the economy is changing, that some borrowers are going to default. It's part of the business of being a lender. Historically, ARCC has been able to trade at a 10-15% premium to NAV, which would be $21.75-$22.75. Certainly the results they are putting up justify that premium, and maybe even a higher one. In 2025, we expect that core EPS will decline a bit, but book value can continue to climb and since ARCC has underpaid earnings so much in 2024, there is the possibility that it pays a supplement in 2025 to distribute its taxable income. ARCC has a long track record, proving its ability to navigate very difficult economic situations like the Great Financial Crisis. Today, ARCC is a much stronger company with a strong balance sheet, conservative leverage, and a fortress portfolio. Conclusion ARCC has a strong track record to look back on, but its actions today help explain how that will continue. Many peers of ARCC have been potentially overzealous in their desire to pay out special and supplemental dividends while times have been good. This was fueled by BDCs being in a goldilocks period – many of them were using low-interest fixed-rate debt to originate loans with high-rate floating interest, providing an abundance of revenue now. The issue is that many of these BDCs who paid out all that abundance are now seeing declining NII, declining NAV, and scarce dividend coverage. I fully expect to see many BDCs reducing their supplemental dividends in the near to mid-term as rates continue to decline, report higher defaults, and increase in debt needing to be refinanced by BDCs. So, what did ARCC do differently? They kept more eggs under the hen. Greater retained capital allowed them to keep originating loans when others couldn't without suffering through higher capital costs. Their portfolio grew in size, so as rates fall, their overall revenue can remain stabilized well above their dividend level—providing a stable and steady income for the storms of life yet to arrive. This is a perfect example of a forward-thinking management team running a top-notch blue-chip BDC, which we aim to hold in our income portfolios.  That's the beauty of my Income Method. That's the beauty of income investing.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482245614"}