Is Ares Capital Stock a Buy Now?
If you are looking at Ares Capital (NASDAQ: ARCC) it is most likely because of the stock's hefty 8%-plus dividend yield. For reference, the S 500 index (SNPINDEX: ^GSPC) is only offering a yield of 1.2% today. And the average financial stock has a yield just shy of 1.4%. It makes complete sense that income seekers would find Ares Capital's yield appealing. But does that make it worth buying now?
Ares Capital is what is known as a business development company (BDC). This is a unique corporate structure that is designed to provide financing to smaller companies. Essentially, Ares provides loans to businesses that might otherwise find it hard to access affordable growth capital. It is supposed to provide some guidance along with the loans, but the big story for investors is the interest that it earns on the loans it makes.
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Source Fool.com
