Ares Capital ARCC
Ares Capital Corporation is a Business Development Company (BDC) that provides debt and equity financing to middle-market companies in the United States, generating income primarily from interest and fees. Ares Capital offers an attractive 10% dividend yield and an exceptional 75.65% operating margin, but earnings growth is negative (-54.10%) and the 143% payout is unsustainable, reflecting a balance between its high yield and moderate financial health.
Detailed metrics
Market and fundamental data as of the analysis date.
Full AI report
Generated automatically from the metrics, the macro context and the company's news.
Ares Capital Corporation is a Business Development Company (BDC) that provides debt and equity financing to middle-market companies in the United States, generating income primarily from interest and fees. Ares Capital offers an attractive 10% dividend yield and an exceptional 75.65% operating margin, but earnings growth is negative (-54.10%) and the 143% payout is unsustainable, reflecting a balance between its high yield and moderate financial health.
Score by category
| Category | Score |
|---|---|
| Financial health | 4.5 |
| Quality / Moat | 9.4 |
| Valuation | 4.5 |
| Growth | 3.1 |
| Dividend | 6.5 |
| Momentum | 5.4 |
| Risk & Context | 7.5 |
OVERALL SCORE: 6.1/10
Context and risks
The rise in 10-year Treasury yields increases ARCC's funding costs, which relies on debt issuance to finance its investments. However, its floating-rate model on the asset side partially mitigates this impact, as interest income also resets higher.
News considered in the analysis
- Why I'd Still Buy This 10%-Yielding Dividend Stock After the Fed's Latest Hike — El titular destaca la sostenibilidad del dividendo de ARCC a pesar del ciclo de tipos, un factor positivo para el sentimiento del inversor.
- Treasury Yields Hit 20-Year Highs. Here's Where Smart Income Investors Should Pivot Today — Artículo genérico sobre rentabilidades de bonos del Tesoro sin mención específica a ARCC; no aporta información nueva sobre la empresa.
- How Much Does a 65-Year-Old Need Invested to Collect $6,250 a Month for Life? — Listículo de planificación de jubilación sin relevancia para los fundamentales de ARCC.
- Ares Capital (ARCC) Sees a More Significant Dip Than Broader Market: Some Facts to Know — La noticia señala una debilidad relativa de la acción en el corto plazo, posiblemente reflejando la sensibilidad a los tipos de interés.
- How to Build $5,350 a Month in Tax-Free Dividend Income Inside a Roth IRA — Contenido promocional sobre estrategias de ingresos sin información específica sobre ARCC.
Verdict: Hold: the high dividend and solid margin offset weak growth and fair valuation, but dividend sustainability is the main concern.
Main risk: The main risk is dividend sustainability, given the 143.28% payout ratio exceeds 100% of earnings, which could force a cut if growth does not recover.
Other Financial Services companies
Neighbours in the sector ranking, to compare without going back to the index.
See all 1,000+ companies in the index →