Is Ares Capital Stock a Buy Now?
The big attraction of Ares Capital (NASDAQ: ARCC) for most investors will be its lofty 8.9% dividend yield. That compares very favorably to the scant 1.2% you could collect from an S&P 500 index fund. Ares Capital's yield is high for a reason, which is why most investors should consider its business model very carefully before buying now or, frankly, at any time.Here's what you need to know before you jump aboard.Ares Capital is a business development company (BDC). This is a unique niche of the finance sector. Essentially, BDCs provide loans to small and medium-sized companies that can't access cash from other sources, like banks or the public markets, in a cost-effective manner. That's a huge statement to think about, since the weighted average yield on Ares Capital's investments was just shy of 10% at the end of the first quarter of 2025.Continue reading
The big attraction of Ares Capital (NASDAQ: ARCC) for most investors will be its lofty 8.9% dividend yield. That compares very favorably to the scant 1.2% you could collect from an S&P 500 index fund. Ares Capital's yield is high for a reason, which is why most investors should consider its business model very carefully before buying now or, frankly, at any time.
Here's what you need to know before you jump aboard.
Ares Capital is a business development company (BDC). This is a unique niche of the finance sector. Essentially, BDCs provide loans to small and medium-sized companies that can't access cash from other sources, like banks or the public markets, in a cost-effective manner. That's a huge statement to think about, since the weighted average yield on Ares Capital's investments was just shy of 10% at the end of the first quarter of 2025.
