Where Will Ares Capital Be in 5 Years?
Ares Capital (NASDAQ: ARCC) is what is known as a business development company (BDC). This is a unique corporation that is designed to pass income on to shareholders. That helps explain the lofty yield on offer. But investors shouldn't buy the stock just because it has a large dividend yield.
There's way more to this story than just the yield. If you ignore the full picture by focusing only on the yield, you could end up sorely disappointed over the next five years.
The problem with Ares Capital isn't really specific to the company. The truth is, it is a very well-respected business development company. For starters, it is backed by Ares Management, a global alternative investment asset manager. As such, it has a large team working to ensure its success.
Source Fool.com
