Ares Capital: How Safe Is This 9.4% Yield?
Summary
- Ares Capital (ARCC) is a high-quality BDC with a diversified loan portfolio and strong track record, making it a solid choice for high-income portfolios.
- ARCC's financials are robust, with a 12% IRR on its $25 billion portfolio and a well-covered 9.4% dividend yield.
- Despite potential risks from falling interest rates, ARCC's credit hedging and floating-rate debt offer some protection, though dividends may dip a little bit.
- Given its stability, diversification, and attractive yield, we rate ARCC a 'Buy' for income investors amid a thinning market for high-income opportunities.
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Over the last month or so, we've begun taking a look at BDCs as potential investment opportunities.
By some measures, the group seems to be on the expensive side of things, following a long period of higher
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