Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Despite expected interest rate declines, BDCs are poised for strong performance in 2025 due to potential rate hikes and inflation uncertainties. BDCs provide capital to small businesses, have high yields, and are sensitive to interest rate changes, making them attractive for dividend-focused investors. Top BDCs like Ares Capital, Main Street Capital, and Blackstone Secured Lending show strong fundamentals, conservative management, and solid balance sheets.
I would say there are more ways to generate passive income than you can shake a stick at. However, that expression might not be true, depending on how big your stick is and how committed you are to shaking it.
Ares Capital (ARCC) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
It's been a great couple of years for investors holding U.S. equities. From the end of 2022 through Dec. 27, the benchmark S&P 500 index soared 55.5%.
Risk is the probability of a negative event in the future. An abstract concept that is not measurable; otherwise it would not be risk. Ascertaining value is the first step in controlling risk, that is, in reducing the possibility of incurring losses that cannot be predicted in advance. My choice to invest in securities with positive NAV performance over time is a way to try to control risk.
I like every part of the phrase "ultra-high-yield dividend stocks." Investing in stocks allows me to own portions of great businesses.
Investors love dividend stocks, especially the high-yield variety, because they offer a significant income stream and have massive total return potential.
Market volatility offers value investors opportunities, with Blue Owl Capital Corp. and W.P. Carey providing high yields and stable income. OBDC gives a 10.9% covered total annualized dividend yield, diversified portfolio, and prudent financial management, making it a solid choice for income-focused investors. WPC offers a 6.5% yield, supported by mission-critical real estate assets, long-term leases, and inflation-resilient rent escalators for steady income and growth.
During the past three years, Ares Capital's (ARCC 0.36%) stock has risen about 6%. That gain might seem tepid, but it delivered a much bigger total return of 42% after including its reinvested dividends.
The Federal Reserve plans to cut overnight rates in 2025, potentially impacting Ares Capital's dividend payouts negatively due to lower interest income. Ares Capital's recent quarter showed strong core earnings of $0.58, net earnings of $0.57, and a leverage ratio of 1.03. Despite potential rate cuts, Ares Capital has a cushion with over a dollar in unpaid earnings and low non-accrual rates at 1.3%.
Deal activity is growing both in number and average size. The backlog and pipeline numbers are also at record highs. A higher floating rate debt mix positions ARCC well for rate cuts ahead in 2025. Valuations are at a small premium vs BDC peers, but it may be justified given ARCC's market-leading position amid a positive deal flow environment.