Replacing a $75,000 salary with investment income from a $1 million portfolio requires a blended yield of exactly 7.5%.
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.
The market is panic-selling two of the most battle-tested BDCs. This creates a rare, time-sensitive window to lock in 10–14% yields at the deepest discounts. I detail the strengths, weaknesses, upside catalysts, and risks for these golden buying opportunities.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price.
End the gamification: Stop treating tickers like wagers; start treating them like the profitable, value-producing businesses they actually are. ARCC: Ignore the "private credit" panic—this lender historically outperforms big banks, even during major global financial crises. AWP: A global real estate play capturing high-quality holdings like WELL and PLD.
Currently, BDCs provide very high-yield opportunities. The fact that additional interest rate cuts are unlikely to happen this year should theoretically support the existing levels. Yet for most BDCs, the damage has already been done.
The latest trading day saw Ares Capital (ARCC) settling at $18.09, representing a +2.03% change from its previous close.
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.
In February, I focused almost exclusively on beaten-down BDCs like Ares Capital, Owl Rock Capital, and Hercules Capital amid macroeconomic turmoil. The portfolio's average yield on cost for new investments was approximately 7.5%, with $65 in annual net dividend income added—below my informal monthly target. Dividend income reached a February record of $533, up 5% YoY, but BDCs now account for 27% of YTD dividends, raising concerns about potential dividend cuts.
Ares Capital (ARCC) concluded the recent trading session at $17.45, signifying a -2.62% move from its prior day's close.
Two fundamentally strong investments now yield over 10%. Both of these 10%+ yielders have track records of outperformance and sustainable dividends. ARCC is trading at its deepest discount in years, and PFFA has managed to grow its payout for years despite being stuffed with fixed-income securities.
Ares Capital and Starwood Property Trust offer high yields, strong dividend records, and trade at meaningful discounts to book value. ARCC has a 10.5% yield, robust credit metrics, a diversified senior secured loan portfolio, and a decade-long record of NAV/share and dividend growth. STWD delivers an 11% yield, benefits from a hybrid lending platform, and is positioned for earnings growth as recent acquisitions and capital deployments ramp up.