Stable Dividend Performance of High-Yield Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 hours ago
0mins
Source: NASDAQ.COM
- Ares Capital's Stable Dividends: Ares Capital has paid a stable or growing dividend for over 16 consecutive years, currently offering a quarterly dividend of $0.48 per share, with a high yield of 10.2% reflecting its strong financial health and earnings capacity, making it appealing to risk-tolerant investors despite its higher risk profile.
- Energy Transfer's Strong Cash Flow: Energy Transfer generated $2.7 billion of distributable cash flow in the first quarter, easily covering nearly $1.2 billion in distributions, and plans to invest between $5.5 billion and $5.9 billion in organic expansion projects in 2023, which is expected to drive its distribution growth by 3% to 5% annually.
- Starwood Property's Consistent Dividends: Starwood Property Trust, a real estate investment trust, has maintained its quarterly dividend rate of $0.48 for over a decade, and although its distributable earnings were $0.39 per share in the first quarter, it has $3.87 per share in unrealized distributable earnings to support its dividend, showcasing its sustainability.
- Attracting Risk Investors: Ares Capital, Energy Transfer, and Starwood Property currently offer dividend yields up to 11.2%, and despite the overall low dividend yields in the market, these companies attract income-seeking investors through their stable dividend strategies, demonstrating their competitiveness in the current market environment.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ARCC?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
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: 18.810
Low
20.00
Averages
21.75
High
23.00
Current: 18.810
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.
Stable Dividend Performance of High-Yield Stocks
- Ares Capital's Stable Dividends: Ares Capital has paid a stable or growing dividend for over 16 consecutive years, currently offering a quarterly dividend of $0.48 per share, with a high yield of 10.2% reflecting its strong financial health and earnings capacity, making it appealing to risk-tolerant investors despite its higher risk profile.
- Energy Transfer's Strong Cash Flow: Energy Transfer generated $2.7 billion of distributable cash flow in the first quarter, easily covering nearly $1.2 billion in distributions, and plans to invest between $5.5 billion and $5.9 billion in organic expansion projects in 2023, which is expected to drive its distribution growth by 3% to 5% annually.
- Starwood Property's Consistent Dividends: Starwood Property Trust, a real estate investment trust, has maintained its quarterly dividend rate of $0.48 for over a decade, and although its distributable earnings were $0.39 per share in the first quarter, it has $3.87 per share in unrealized distributable earnings to support its dividend, showcasing its sustainability.
- Attracting Risk Investors: Ares Capital, Energy Transfer, and Starwood Property currently offer dividend yields up to 11.2%, and despite the overall low dividend yields in the market, these companies attract income-seeking investors through their stable dividend strategies, demonstrating their competitiveness in the current market environment.
See More
Three High-Yield Stocks to Boost Dividend Income
- Ares Capital's High Yield: Ares Capital (ARCC) currently offers a dividend yield of 10.2%, necessitated by its requirement to distribute 90% of taxable net income, ensuring sustainability and demonstrating competitive strength in high-risk dividend stocks with over 16 years of stable growth.
- Energy Transfer's Cash Flow: Energy Transfer (ET) generated $2.7 billion of distributable cash flow in Q1, easily covering nearly $1.2 billion in distributions, while planning to invest between $5.5 billion and $5.9 billion in organic expansion projects in 2023, which is expected to drive annual dividend growth of 3% to 5%.
- Starwood Property Trust's Stability: Starwood Property Trust (STWD) boasts an 11.2% dividend yield, maintaining a quarterly dividend of $0.48 for over a decade; despite Q1 distributable earnings falling short of dividends, it holds $3.87 per share in unrealized distributable earnings, ensuring dividend security.
- Investment Opportunities for Risk Tolerance: Ares Capital, Energy Transfer, and Starwood Property all present high-yield dividends, making them attractive for risk-tolerant investors to bolster dividend income in June, highlighting the necessity of seeking appealing investments in a low-yield environment.
See More
Private Credit Defaults May Rise to 10% Amid AI Disruption
- Default Rate Forecast: UBS anticipates private credit default rates will rise from the current 4.4% to between 9% and 10%, with AI-related disruptions potentially adding an additional 3% to 4% default risk, indicating increased pressure on borrowers.
- Industry Vulnerability: Software companies are deemed particularly vulnerable as advancements in AI may slow revenue growth, weaken pricing power, compress margins, and lead to contract cancellations, with these pressures expected to intensify toward the end of 2026 and into 2027.
- Market Impact Comparison: UBS forecasts private credit defaults of 9% to 10% by the end of 2026, compared to 3.5% to 4% for leveraged loans and 1.75% to 2% for high-yield bonds, highlighting significant variations in default rates across different credit markets.
- Leverage Risk Warning: UBS notes that leverage in private credit and private equity markets totals at least $1.5 trillion, and while credit markets currently support the ongoing AI investment boom, rising defaults could impose greater constraints on funding conditions by 2027.
See More
U.S. Private Credit Lenders Face Deepening Losses
- Deepening Unrealized Losses: In Q1 2026, U.S. private credit lenders reported unrealized losses of 2.35% of net asset value, marking the worst quarterly performance since Q2 2022, indicating increased strain on middle-market companies due to higher borrowing costs.
- Pressure on Cash Income: Payment-in-kind (PIK) interest income remained elevated at approximately $477 million, a 2% increase from the previous quarter but below the early 2025 peak of $633 million, highlighting investor concerns over non-cash income.
- Liquidity Risk Warning: Fitch has cautioned that rising exposure to loans with deferrable interest could pressure BDC liquidity if cash earnings are insufficient to cover dividend payments, increasing market uncertainty.
- Market Cycle Shift: Howard Mason from Renaissance Macro Research noted that private credit is entering its first real credit cycle since the Global Financial Crisis, with rising borrowing costs and AI-related pressures on software valuations particularly impacting highly leveraged deals from 2021.
See More
Ares Management CEO Discusses M&A and Market Outlook
- M&A Performance Exceeds Expectations: Ares Management CEO Michael Arougheti stated that approximately 20% of the company's AUM growth has stemmed from transformational acquisitions, particularly the GCP acquisition, which added significant Japanese real estate and data center development businesses, showcasing the company's strategic success in M&A.
- Diversified Strategies Drive Profitability: Arougheti emphasized that while high rates pose challenges in certain areas, the company's diversified strategies enable profitable growth in any rate environment, demonstrating resilience and adaptability in its business model.
- Stability in Private Credit Market: Discussing private credit, Arougheti noted that the loan and high-yield markets are not showing significant stress, with Ares' software portfolio representing about 8% of its private credit book, reflecting effective risk management practices within the company.
- Recovery in Direct Lending Activity: Although direct lending activity in the U.S. was slow in Q1, Arougheti indicated that it is now picking up, signaling a recovery in market demand and the company's proactive positioning in the credit space.
See More
Diverse Risk Premiums Assigned to U.S. Private Credit Firms
- Risk Premium Disparity: A Reuters analysis reveals that U.S. private credit firms are facing diverse risk premiums, with smaller lenders priced at greater risk, indicating a growing selectivity in a market under borrower stress.
- Spread Data: BCP Investment Corp recorded the highest weighted average option-adjusted spread (OAS) at 680 basis points, followed by Prospect Capital Corp at 449 bps, highlighting market concerns over varying credit quality among firms.
- Market Selectivity: The widening of spreads this year reflects investors' increasing differentiation of BDCs exposed to AI disruptions in SaaS companies, signaling a heightened focus on credit quality and funding risks.
- Rising Default Rates: Fitch Ratings reports that the default rate among U.S. private credit borrowers reached 6% over the past 12 months, the highest since August 2024, indicating a weakening backdrop for the private credit market.
See More
Stable Dividend Performance of High-Yield Stocks
- Ares Capital's Stable Dividends: Ares Capital has paid a stable or growing dividend for over 16 consecutive years, currently offering a quarterly dividend of $0.48 per share, with a high yield of 10.2% reflecting its strong financial health and earnings capacity, making it appealing to risk-tolerant investors despite its higher risk profile.
- Energy Transfer's Strong Cash Flow: Energy Transfer generated $2.7 billion of distributable cash flow in the first quarter, easily covering nearly $1.2 billion in distributions, and plans to invest between $5.5 billion and $5.9 billion in organic expansion projects in 2023, which is expected to drive its distribution growth by 3% to 5% annually.
- Starwood Property's Consistent Dividends: Starwood Property Trust, a real estate investment trust, has maintained its quarterly dividend rate of $0.48 for over a decade, and although its distributable earnings were $0.39 per share in the first quarter, it has $3.87 per share in unrealized distributable earnings to support its dividend, showcasing its sustainability.
- Attracting Risk Investors: Ares Capital, Energy Transfer, and Starwood Property currently offer dividend yields up to 11.2%, and despite the overall low dividend yields in the market, these companies attract income-seeking investors through their stable dividend strategies, demonstrating their competitiveness in the current market environment.
See More
Three High-Yield Stocks to Boost Dividend Income
- Ares Capital's High Yield: Ares Capital (ARCC) currently offers a dividend yield of 10.2%, necessitated by its requirement to distribute 90% of taxable net income, ensuring sustainability and demonstrating competitive strength in high-risk dividend stocks with over 16 years of stable growth.
- Energy Transfer's Cash Flow: Energy Transfer (ET) generated $2.7 billion of distributable cash flow in Q1, easily covering nearly $1.2 billion in distributions, while planning to invest between $5.5 billion and $5.9 billion in organic expansion projects in 2023, which is expected to drive annual dividend growth of 3% to 5%.
- Starwood Property Trust's Stability: Starwood Property Trust (STWD) boasts an 11.2% dividend yield, maintaining a quarterly dividend of $0.48 for over a decade; despite Q1 distributable earnings falling short of dividends, it holds $3.87 per share in unrealized distributable earnings, ensuring dividend security.
- Investment Opportunities for Risk Tolerance: Ares Capital, Energy Transfer, and Starwood Property all present high-yield dividends, making them attractive for risk-tolerant investors to bolster dividend income in June, highlighting the necessity of seeking appealing investments in a low-yield environment.
See More
Private Credit Defaults May Rise to 10% Amid AI Disruption
- Default Rate Forecast: UBS anticipates private credit default rates will rise from the current 4.4% to between 9% and 10%, with AI-related disruptions potentially adding an additional 3% to 4% default risk, indicating increased pressure on borrowers.
- Industry Vulnerability: Software companies are deemed particularly vulnerable as advancements in AI may slow revenue growth, weaken pricing power, compress margins, and lead to contract cancellations, with these pressures expected to intensify toward the end of 2026 and into 2027.
- Market Impact Comparison: UBS forecasts private credit defaults of 9% to 10% by the end of 2026, compared to 3.5% to 4% for leveraged loans and 1.75% to 2% for high-yield bonds, highlighting significant variations in default rates across different credit markets.
- Leverage Risk Warning: UBS notes that leverage in private credit and private equity markets totals at least $1.5 trillion, and while credit markets currently support the ongoing AI investment boom, rising defaults could impose greater constraints on funding conditions by 2027.
See More
U.S. Private Credit Lenders Face Deepening Losses
- Deepening Unrealized Losses: In Q1 2026, U.S. private credit lenders reported unrealized losses of 2.35% of net asset value, marking the worst quarterly performance since Q2 2022, indicating increased strain on middle-market companies due to higher borrowing costs.
- Pressure on Cash Income: Payment-in-kind (PIK) interest income remained elevated at approximately $477 million, a 2% increase from the previous quarter but below the early 2025 peak of $633 million, highlighting investor concerns over non-cash income.
- Liquidity Risk Warning: Fitch has cautioned that rising exposure to loans with deferrable interest could pressure BDC liquidity if cash earnings are insufficient to cover dividend payments, increasing market uncertainty.
- Market Cycle Shift: Howard Mason from Renaissance Macro Research noted that private credit is entering its first real credit cycle since the Global Financial Crisis, with rising borrowing costs and AI-related pressures on software valuations particularly impacting highly leveraged deals from 2021.
See More
Ares Management CEO Discusses M&A and Market Outlook
- M&A Performance Exceeds Expectations: Ares Management CEO Michael Arougheti stated that approximately 20% of the company's AUM growth has stemmed from transformational acquisitions, particularly the GCP acquisition, which added significant Japanese real estate and data center development businesses, showcasing the company's strategic success in M&A.
- Diversified Strategies Drive Profitability: Arougheti emphasized that while high rates pose challenges in certain areas, the company's diversified strategies enable profitable growth in any rate environment, demonstrating resilience and adaptability in its business model.
- Stability in Private Credit Market: Discussing private credit, Arougheti noted that the loan and high-yield markets are not showing significant stress, with Ares' software portfolio representing about 8% of its private credit book, reflecting effective risk management practices within the company.
- Recovery in Direct Lending Activity: Although direct lending activity in the U.S. was slow in Q1, Arougheti indicated that it is now picking up, signaling a recovery in market demand and the company's proactive positioning in the credit space.
See More
Diverse Risk Premiums Assigned to U.S. Private Credit Firms
- Risk Premium Disparity: A Reuters analysis reveals that U.S. private credit firms are facing diverse risk premiums, with smaller lenders priced at greater risk, indicating a growing selectivity in a market under borrower stress.
- Spread Data: BCP Investment Corp recorded the highest weighted average option-adjusted spread (OAS) at 680 basis points, followed by Prospect Capital Corp at 449 bps, highlighting market concerns over varying credit quality among firms.
- Market Selectivity: The widening of spreads this year reflects investors' increasing differentiation of BDCs exposed to AI disruptions in SaaS companies, signaling a heightened focus on credit quality and funding risks.
- Rising Default Rates: Fitch Ratings reports that the default rate among U.S. private credit borrowers reached 6% over the past 12 months, the highest since August 2024, indicating a weakening backdrop for the private credit market.
See More
