Ares Capital is upgraded to a buy, trading at a rare sub-average premium to NAV and offering a 9.6% dividend yield. ARCC's $1.5B backlog, floating-rate portfolio, and new $1B commercial paper program position it well for a higher-rate environment. Portfolio diversification remains strong, with minimal AI/software risk and robust spillover income supporting distributions.
Certain high-yield investments quietly hand thousands of dollars to the IRS every single year, and most investors holding them in taxable accounts have never stopped to calculate exactly how much they are surrendering before reinvesting a single cent.
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Ares Capital's non-accrual loans rose to 2.4% in the second quarter of 2026, up from 1.8% a year ago. Compared to the BDC industry and Ares Capital's own history, the portfolio is still performing very strongly.
A $500,000 basket of business development companies and midstream MLPs currently throws off roughly $42,000 in ordinary income every year. At the 24% federal bracket, that hands the IRS about $10,080 annually before you touch a share.
At the 24% federal bracket, every $10,000 of ordinary dividend income in a taxable brokerage account costs $2,400 in federal tax before it reaches your account. Scale that up: a $50,000 dividend stream costs $12,000 annually.
Business development companies are engineered to move cash out the door: by statute, a BDC must distribute at least 90% of taxable income to shareholders, and the bulk of that income lands on your 1099 as ordinary, not qualified.
At the 24% federal ordinary-income bracket, a portfolio throwing off $50,000 a year in non-qualified dividend income hands $12,000 straight to the IRS every filing season.
At the 24% federal marginal bracket, roughly one of every four dollars of ordinary dividend income earned in a taxable brokerage account is handed to the IRS.
The Federal Reserve's recent path has left investors bracing for the next turn.
At the 24% federal bracket, a $50,000 stream of ordinary dividend income hands roughly $12,000 to the IRS every year.
Ares Capital delivered a 1.3% total NAV return in Q2, with idiosyncratic credit markdowns driving subdued performance. ARCC trades at a 3% discount and 10.2% dividend yield, but dividend coverage is slightly below 100%. Portfolio quality remains solid, with diversified exposure and robust software sector performance.