Ares Capital: Wealth Creation Through High-Yield Dividends
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 23 hours ago
0mins
Should l Buy ARCC?
Source: Fool
- Significant Dividend Yield: Ares Capital has paid dividends consistently since its 2004 IPO, boasting a current yield of 10.06%, which significantly surpasses the S&P 500's 1.1%, making it a vital tool for wealth accumulation for investors.
- Superior Investment Returns: Since its IPO, Ares Capital has achieved an average annual total return of 12%, growing a $10,000 investment to nearly $117,000, while the same investment in the S&P 500 would only be worth about $95,000, highlighting its exceptional performance.
- Strong Profitability: Last year, Ares Capital generated $2.02 in core earnings per share, exceeding the $1.92 per share paid in dividends, indicating its ability to consistently produce earnings above its dividend payouts, with an expected $1.38 per share of excess earnings carried into 2026.
- Loan Portfolio Growth: The company added a record $4.5 billion in new gross debt commitments last year, increasing its investment portfolio from $26.7 billion to $29.5 billion, while maintaining a net realized loss rate below 0%, demonstrating its focus on quality despite growth.
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Analyst Views on ARCC
Wall Street analysts forecast ARCC stock price to rise
4 Analyst Rating
4 Buy
0 Hold
0 Sell
Strong Buy
Current: 19.120
Low
20.00
Averages
21.75
High
23.00
Current: 19.120
Low
20.00
Averages
21.75
High
23.00
About ARCC
Ares Capital Corporation is a specialty finance company focused on providing direct loans and other investments in private middle market companies in the United States. The Company invests primarily in first lien senior secured loans (including unitranche loans, which are loans that combine both senior and subordinated debt, generally in a first lien position), and second lien senior secured loans. In addition to senior secured loans, it also invests in subordinated debt, which in some cases includes an equity component, and preferred equity. It also may invest up to 30% of its portfolio in non-qualifying assets. Its investment activities are focused on industries, such as software and services, health care services, commercial and professional services, financial services, commercial and professional services, insurance services, energy, food and beverage and others. The Company is externally managed by Ares Capital Management LLC (investment adviser).
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Ares Capital: Wealth Creation Through High-Yield Dividends
- Significant Dividend Yield: Ares Capital has paid dividends consistently since its 2004 IPO, boasting a current yield of 10.06%, which significantly surpasses the S&P 500's 1.1%, making it a vital tool for wealth accumulation for investors.
- Superior Investment Returns: Since its IPO, Ares Capital has achieved an average annual total return of 12%, growing a $10,000 investment to nearly $117,000, while the same investment in the S&P 500 would only be worth about $95,000, highlighting its exceptional performance.
- Strong Profitability: Last year, Ares Capital generated $2.02 in core earnings per share, exceeding the $1.92 per share paid in dividends, indicating its ability to consistently produce earnings above its dividend payouts, with an expected $1.38 per share of excess earnings carried into 2026.
- Loan Portfolio Growth: The company added a record $4.5 billion in new gross debt commitments last year, increasing its investment portfolio from $26.7 billion to $29.5 billion, while maintaining a net realized loss rate below 0%, demonstrating its focus on quality despite growth.
See More
Analysis of High-Yield Stock Investment Opportunities
- Federal Realty Investment Trust: Federal Realty has achieved 'Dividend King' status with 58 consecutive years of dividend increases, currently offering a 4.1% yield, making it an attractive option for conservative investors and highlighting its appeal in the high-yield stock sector.
- Enterprise Products Partners: As one of North America's largest midstream energy companies, Enterprise avoids commodity risk by charging fees for asset usage, having increased its distribution for 27 consecutive years, with a current yield of 5.7%, showcasing strong cash flow coverage suitable for income-seeking investors.
- Ares Capital Corporation: Ares Capital, a large business development company, provides high-interest loans, which can be risky, yet it offers a high yield of 10.5%, making it appealing for investors with other income sources who can tolerate dividend fluctuations.
- Diverse Investment Options: Federal Realty, Enterprise, and Ares Capital present a range of high-yield investment opportunities; while not suitable for every investor, they may be ideal in a market where the S&P 500 index yields only 1.1%, catering to specific income needs.
See More
Whitestone REIT Shares Surge 11% Following $1.7 Billion Acquisition by Ares Management.
- Acquisition Announcement: Ares Management has agreed to acquire Whitestone REIT.
- Transaction Details: The deal is valued at $1.7 billion and will be conducted as an all-cash transaction.
See More
Ares Management to Acquire Whitestone REIT in $1.7 Billion Transaction
- Ares Management Acquisition: Ares Management has agreed to acquire Whitestone REIT in a deal valued at $1.7 billion.
- Transaction Details: The acquisition will be conducted as an all-cash transaction, taking Whitestone REIT private.
See More
OpenAI Faces Challenges in Monetization Strategy
- Market Share Battle: OpenAI plans to double its headcount in the coming months to compete with Anthropic, highlighting the urgency and desire for market share in the AI sector.
- Partnership Termination: Walmart has ended its agentic commerce deal with OpenAI due to poor conversion rates, which not only impacts OpenAI's reputation but may also lead to decreased client confidence in the future.
- Funding Plan Revealed: OpenAI is seeking private equity funding, promising up to a 17.5% return for preferred investors, indicating pressure in fundraising that could affect its IPO prospects.
- Unclear Profit Model: Despite an IPO valuation approaching $1 trillion, the lack of a clear monetization strategy raises investor concerns about sustainability, potentially diminishing market interest in its stock.
See More
The Private Credit Industry Faces Challenges: Implications for Publicly Traded BDCs.
Private Credit Meltdown: There is increasing concern over a meltdown in private credit, particularly focusing on non-traded business development companies (BDCs).
Implications for Listed BDCs: While the situation for listed BDCs remains uncertain, they seem to be experiencing similar stress as their non-traded counterparts.
See More
Ares Capital: Wealth Creation Through High-Yield Dividends
- Significant Dividend Yield: Ares Capital has paid dividends consistently since its 2004 IPO, boasting a current yield of 10.06%, which significantly surpasses the S&P 500's 1.1%, making it a vital tool for wealth accumulation for investors.
- Superior Investment Returns: Since its IPO, Ares Capital has achieved an average annual total return of 12%, growing a $10,000 investment to nearly $117,000, while the same investment in the S&P 500 would only be worth about $95,000, highlighting its exceptional performance.
- Strong Profitability: Last year, Ares Capital generated $2.02 in core earnings per share, exceeding the $1.92 per share paid in dividends, indicating its ability to consistently produce earnings above its dividend payouts, with an expected $1.38 per share of excess earnings carried into 2026.
- Loan Portfolio Growth: The company added a record $4.5 billion in new gross debt commitments last year, increasing its investment portfolio from $26.7 billion to $29.5 billion, while maintaining a net realized loss rate below 0%, demonstrating its focus on quality despite growth.
See More
Analysis of High-Yield Stock Investment Opportunities
- Federal Realty Investment Trust: Federal Realty has achieved 'Dividend King' status with 58 consecutive years of dividend increases, currently offering a 4.1% yield, making it an attractive option for conservative investors and highlighting its appeal in the high-yield stock sector.
- Enterprise Products Partners: As one of North America's largest midstream energy companies, Enterprise avoids commodity risk by charging fees for asset usage, having increased its distribution for 27 consecutive years, with a current yield of 5.7%, showcasing strong cash flow coverage suitable for income-seeking investors.
- Ares Capital Corporation: Ares Capital, a large business development company, provides high-interest loans, which can be risky, yet it offers a high yield of 10.5%, making it appealing for investors with other income sources who can tolerate dividend fluctuations.
- Diverse Investment Options: Federal Realty, Enterprise, and Ares Capital present a range of high-yield investment opportunities; while not suitable for every investor, they may be ideal in a market where the S&P 500 index yields only 1.1%, catering to specific income needs.
See More
Whitestone REIT Shares Surge 11% Following $1.7 Billion Acquisition by Ares Management.
- Acquisition Announcement: Ares Management has agreed to acquire Whitestone REIT.
- Transaction Details: The deal is valued at $1.7 billion and will be conducted as an all-cash transaction.
See More
Ares Management to Acquire Whitestone REIT in $1.7 Billion Transaction
- Ares Management Acquisition: Ares Management has agreed to acquire Whitestone REIT in a deal valued at $1.7 billion.
- Transaction Details: The acquisition will be conducted as an all-cash transaction, taking Whitestone REIT private.
See More
OpenAI Faces Challenges in Monetization Strategy
- Market Share Battle: OpenAI plans to double its headcount in the coming months to compete with Anthropic, highlighting the urgency and desire for market share in the AI sector.
- Partnership Termination: Walmart has ended its agentic commerce deal with OpenAI due to poor conversion rates, which not only impacts OpenAI's reputation but may also lead to decreased client confidence in the future.
- Funding Plan Revealed: OpenAI is seeking private equity funding, promising up to a 17.5% return for preferred investors, indicating pressure in fundraising that could affect its IPO prospects.
- Unclear Profit Model: Despite an IPO valuation approaching $1 trillion, the lack of a clear monetization strategy raises investor concerns about sustainability, potentially diminishing market interest in its stock.
See More
The Private Credit Industry Faces Challenges: Implications for Publicly Traded BDCs.
Private Credit Meltdown: There is increasing concern over a meltdown in private credit, particularly focusing on non-traded business development companies (BDCs).
Implications for Listed BDCs: While the situation for listed BDCs remains uncertain, they seem to be experiencing similar stress as their non-traded counterparts.
See More
