Is Ares Capital Stock a Buy Now?
The single most important thing to understand about Ares Capital (NASDAQ: ARCC) is that it is a business development company (BDC). That's even more important than the huge 8.5% dividend yield it is offering today. Here's a look at the key facts here, before you add this high-yield stock to your dividend portfolio.
As noted, Ares Capital is a business development company. That's a unique business model, with the company effectively acting as a lender to small businesses. There are some rules around BDCs that are important. For example, they are supposed to provide guidance to the companies to which they are lending. And there are limits on the amount of leverage a BDC can take on at the corporate level, which helps to limit risk.
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Source Fool.com
