10 Best BDC Stocks To Invest In

03. Ares Capital Corporation (NASDAQ:ARCC)

Number of Hedge Fund Holders: 16

Ares Capital Corporation (NASDAQ:ARCC) stands out as a leading choice among Business Development Companies (BDCs) due to its comprehensive approach to providing capital and its consistent track record of delivering strong financial performance. As a BDC, Ares Capital specializes in investing in middle-market companies across various sectors including manufacturing, healthcare, and technology. Its diversified investment strategy, which includes acquisition, recapitalization, and mezzanine debt, positions it well to capitalize on evolving market opportunities. The company’s robust investment platform and strategic regional focus enhance its ability to generate attractive returns and provide capital solutions across a broad spectrum of industries.

In the second quarter of 2024, Ares Capital Corporation exceeded earnings expectations, reporting core earnings per share (EPS) of $0.61, surpassing the anticipated $0.58. This represents a 5% increase year-over-year, underscoring the company’s solid performance amidst a competitive market. The positive financial results were driven by a favorable investment environment, healthy credit performance, and a significant increase in deal flow. The company achieved a record net asset value (NAV) per share of $19.61, reflecting a 6% year-over-year growth.

Ares Capital Corporation (NASDAQ:ARCC) financial metrics highlight its strong position in the market. The company’s portfolio at fair value grew to $25 billion, up from $23 billion in the previous quarter, showcasing its active investment strategy. The weighted average yield on its debt and income-producing securities remained stable at 12.2%, with an overall yield on investments at 11.1%. This demonstrates the company’s ability to maintain high returns on its investments despite market fluctuations. The company declared a quarterly dividend of $0.48 per share, marking its 15th consecutive year of stable or increasing dividends. This yield is supported by a strong taxable income spillover, estimated at $635 million or $1.05 per share for 2024, providing further stability and visibility for investors.

In summary, Ares Capital Corporation (NASDAQ:ARCC) impressive financial performance, strategic investment approach, and robust dividend yield make it a compelling addition to any portfolio focused on BDC stocks. Its consistent ability to deliver strong returns and maintain a high dividend yield underscores its appeal as a top investment choice in the BDC sector.