Stock of the Day

September 11, 2024

Ares Capital (ARCC)

$18.92
+$0.33 (+1.8%)
Market Cap: $13.35B

About Ares Capital

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.

Today's Trend

Ares Capital Corporation (NASDAQ: ARCC) shares have increased as recent coverage emphasizes the stock’s high-income potential and valuation near book value. The investment company’s roughly 9.7% yield is attracting income-focused investors, while its trading price remains near its 50-day average and above its 200-day average.

  • An investment analysis describes Ares Capital as an attractive high-yield opportunity available around book value. The article’s bullish thesis is supported by ARCC’s substantial dividend yield and its position as one of the largest business development companies. Ares Capital: I'm Buying This 9.7% Yield At Book Value
  • Income-investing coverage includes ARCC among high-yield stocks that can help generate meaningful passive income. This reinforces demand from investors seeking cash distributions that are less dependent on market direction. It Only Takes Investing $1,000 In These 3 Stocks For $200 In Passive Income Every Year
  • A comparison of two BDCs focuses on monthly payout growth and retirement-account suitability, keeping investor attention on ARCC’s distribution record and ability to provide compounding income. Only 1 of These 2 BDCs Keeps Raising Its Monthly Payout
  • A brokerage-focused report says analysts’ average recommendation suggests adding Ares Capital to a portfolio, but it also cautions that sell-side recommendations can be overly optimistic and should not be used alone as a buy signal. Brokers Suggest Investing in Ares Capital
  • The high-yield articles note that unusually large payouts can carry risks, including pressure on the underlying business or dividend sustainability. ARCC’s latest quarter also showed EPS of $0.47, down from $0.50 a year earlier, while revenue came in slightly below estimates. Boomers Are Piling Into These 5 High-Yield Dividend Stocks
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