Why I Just Loaded Up on This 9.2%-Yielding Dividend Stock

• Ares Capital offers a precocious yet sustainable dividend yield.

• The institution besides has coagulated semipermanent prospects.

• 10 stocks we similar amended than Ares Capital ›

I've bought respective stocks successful the archetypal fewer weeks of 2026. One acquisition for which I clasp an particularly beardown condemnation is Ares Capital (NASDAQ: ARCC).

This starring concern improvement institution (BDC) has been successful my portfolio for a while. Why did I conscionable load up adjacent much connected this stock? Two reasons basal out.

You astir apt noticed that the header of this nonfiction mentioned a 9.2% dividend yield. I'd beryllium lying if I didn't admit that this ultra-high output was a cardinal origin successful my determination to bargain much Ares Capital shares.

However, it's adjacent much important to maine that Ares Capital's dividend is some precocious and sustainable. The institution has either maintained oregon grown its dividend for 65 consecutive quarters (over 16 consecutive years).

Ares Capital continues to make halfway net that transcend its dividend payout, a streak the BDC has maintained for 20 consecutive quarters. It besides has capable taxable income spillover to enactment much than 2 quarters of dividends astatine existent levels, which provides a bully cushion if net temporarily dip.

I don't trust connected Ares Capital's dividends for income, by the way. They do, though, importantly boost the stock's full return. In fact, Ares Capital has delivered cumulative returns that are 40% higher than those of the S&P 500 (SNPINDEX: ^GSPC) and 3 times higher than those of the S&P BDC Index since its archetypal nationalist offering successful 2004.

The 2nd cardinal crushed wherefore I precocious added to my presumption successful Ares Capital is that I judge the institution has coagulated semipermanent prospects. Middle-market businesses are progressively turning to nonstop lending due to the fact that it allows them to rapidly and reliably adjacent financing transactions.

Ares Capital estimates its full addressable marketplace astatine $5.4 trillion. Around $3 trillion of this full is the accepted mediate marketplace – companies with yearly gross betwixt $100 cardinal and $1 billion. There's besides an further $2.4 trillion accidental serving companies with much than $1 cardinal successful yearly revenue.

While I don't person immoderate illusions that Ares Capital volition seizure a immense chunk of its full addressable market, the institution doesn't request to bash truthful to present coagulated growth. I presumption Ares Capital's manufacture relationships, entree to capital, and underwriting expertise arsenic important competitory advantages.