With high yield in vogue these days, Ares Capital (ARCC) is worth a look even after a big gain this year. Back in August at the time of the Q2 earnings release, the company announced an increased dividend to $0.38 plus a bonus dividend of $0.05. Counting only the normal dividend, the stock currently yields 8.7%.
The company is a business development company (BDC) that operates as a leading specialty finance company that provides one-stop financing solutions to U.S. middle market companies and private equity sponsors. The company originates and invests in senior secured loans, mezzanine debt and, to a lesser extent, equity investments through its national direct origination platform.
Ares Capital competes against companies like American Capital, Ltd (ACAS), KKR Financial Holdings LLC (KFN), and Main Street Capital Corp. (MAIN). All of these stocks have had huge gains in the last year, yet all but American Capital provide still compelling dividends.
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