| Stock Ticker | Home Page | Asset Class | Sector | Industry | Investment Strategy | Dividend Frequency | Geographic Focus |
|---|---|---|---|---|---|---|---|
| ARCC | Ares Capital Corporation | Stock / Equity | Financial | Investment / Business Development Company | Income | Quarterly | United States |
ARCC, or Ares Capital Corporation, is a leading business development company that provides debt and equity financing to middle-market companies. One of the main draws for investors is ARCC's attractive dividend yield. As a BDC, ARCC is required to distribute at least 90% of its taxable income as dividends to shareholders. This mandate, combined with ARCC's robust portfolio of investments across various industries, has allowed the company to maintain a steady stream of dividend payments.
ARCC's dividend yield currently stands at around 9.5%, which is significantly higher than the average yield of the S&P 500 index. Moreover, the company has a strong track record of increasing its dividend over time, having raised its payout for several consecutive years. This consistent dividend growth, coupled with the high yield, makes ARCC an appealing investment option for income-oriented investors. However, it's important to note that BDCs like ARCC carry higher risks compared to traditional stocks, so investors should carefully evaluate their risk tolerance and diversify their portfolios accordingly.
| Section | Information |
|---|---|
Overview: |
ARCC is a closed-end fund specializing in debt financing for middle-market private companies in North America. It acts as an intermediary, providing loan solutions while offering investors access to the traditionally opaque private debt market. Its target market primarily includes income-seeking investors seeking high yields and portfolio diversification. As a BDC, ARCC doesn't have a market share in the traditional sense, but rather manages a portfolio of debt investments. Its mission is to generate attractive risk-adjusted returns for shareholders through consistent dividends and potential capital appreciation. |
Business Model: |
ARCC generates revenue primarily through interest income earned on its loan portfolio. It originates or acquires various debt instruments like senior secured loans, second lien loans, and mezzanine debt. Its value chain involves sourcing and underwriting deals, managing the loan portfolio, and collecting interest payments. Key partners include financial institutions and originators who help identify deals, and legal and investment teams who manage the lending process and portfolio risks. |
Industry Competition: |
ARCC faces competition from other BDCs offering similar debt financing solutions. Additionally, it competes with direct lenders, private equity firms, and traditional banks for deal flow. Recent industry trends include increased regulatory scrutiny, focus on environmental, social, and governance (ESG) factors, and the rise of alternative lending platforms. |
Competitive Advantage: |
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Management Team: |
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Financial Performance: |
ARCC has exhibited consistent income generation, with a 5-year average annualized dividend yield of 8.59%. It has also shown potential for capital appreciation, with a total annual return of 14.89% over the same period. However, its performance is susceptible to economic conditions, interest rate fluctuations, and defaults within its loan portfolio. Upcoming events like changes in industry regulations or economic downturns could impact future financial performance. |
Investment Thesis: |
Investors might consider ARCC for:
However, investors should also be aware of potential risks:
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Conclusion: |
ARCC presents a compelling option for experienced investors seeking high income and access to the private debt market. Its attractive yield, experienced management, and diversified portfolio offer valuable advantages. However, the higher volatility, limited liquidity, interest rate sensitivity, and operational risks require careful consideration. Ultimately, thorough research and a strong understanding of BDCs are crucial before investing in ARCC. |
| Section | Details |
|---|---|
ARCC Dividend Data |
Ares Capital Corporation (ARCC) has an annual dividend of $1.60 per share. The dividend is paid quarterly. The last ex-dividend date was on March 14, 2024. |
ARCC Dividend Yield |
The forward yield of ARCC is 9.6%. This means that for every $100 invested in the company's stock, investors would receive $9.60 in dividends per year. |
ARCC Dividend History |
ARCC has a consistent history of paying dividends. The company has increased its dividends for several consecutive years. The most recent quarterly dividend payment of $0.40 per share was made to shareholders on March 29, 2024. |
ARCC Dividend Payout & Dividend Payout Ratio |
The dividend payout ratio for ARCC is 92.5% based on the trailing year of earnings. This means that 92.5% of the company's earnings are paid out as dividends. |
ARCC Dividend Growth |
Over the past three years, the company's dividend has grown by an average of 3.2% per year. The most recent change in the company's dividend was an increase of $0.02 on May 3, 2023. |
ARCC Dividend Stability |
ARCC's dividend has shown stability with its consistent growth over the years. The company has a track record of raising its dividend for several consecutive years. This is a positive sign of the company's financial stability and its ability to pay consistent dividends in the future. |
| ARCC (Ares Capital Corporation) | Main Street Capital (MAIN) | Prospect Capital (PSEC) | |
|---|---|---|---|
Industry Focus |
Middle-market lending and investment | Lower middle-market lending and investment | Middle-market lending and investment |
Forward Current Yield |
9.6% | 6.4% | 12.3% |
Price-to-Earnings Ratio (P/E) |
5.58 | 8.76 | -- |
Investment Strategy |
Diversified portfolio of middle-market debt and equity investments | Focus on lower middle-market companies with strong cash flow | Combination of first and second-lien debt investments |
Before adding ARCC stock to your watchlist or deciding to buy shares, it's crucial to understand the risks associated with the company's dividend. While ARCC's yield of 9.49% and its history of increasing dividends over the past 5 years may seem attractive, investors should carefully evaluate the sustainability of the payout. ARCC's dividend payout ratio of 92.5% represents a significant percentage of the company's earnings being distributed as dividends.
According to tipranks and other financial analysis platforms, ARCC's high payout ratio could be a cause for concern, as it may limit the company's ability to reinvest in growth opportunities or maintain the dividend during economic downturns. Additionally, as a consumer of historical data, investors should note that ARCC's upcoming ex-dividend date is March 14, 2024, when the stock will trade ex-dividend for its next $0.48 per share quarterly payout.
While ARCC has a strong dividend history since its inception in 2004, with an annual payout of $1.92 per share, it's essential to consider the recommendation from financial experts and conduct thorough research before deciding to receive a dividend from Ares Capital Corporation (ARCC). Creating a free account on reputable financial websites can provide access to more in-depth information and analysis to help you make an informed decision about adding ARCC stock to your portfolio.