These 3 Dividend Stocks Could Slash Their Payouts
Shareholders of Triangle Capital (NYSE: TCAP), Ares Capital (NASDAQ: ARCC), and Hercules Capital (NYSE: HTGC) should look at these stocks' sky-high yields with skepticism. As business-development companies (BDCs), these stocks reward investors with high yields, thanks to a requirement that they distribute 90% of their income to shareholders. BDCs can be thought of as closed-end funds that make loans and equity investments in small, private companies around the United States.
Recently, the yields BDCs can earn on new investments have come down, and loan losses have increased. It's likely that these three companies will have to cut their dividends to align their payouts with their true earnings power.
Gravity is working against these three companies' lofty payouts to investors. Image source: Getty Images.
Source: Fool.com
Ares Capital Corp. Stock
With 16 Buy predictions and only 1 Sell predictions the community sentiment for the stock is positive.
With a target price of 17 € there is a slightly positive potential of 4.46% for Ares Capital Corp. compared to the current price of 16.27 €.
