The Private Credit Boom Faces a Real Test. What It Means for Ares Capital.
Key takeaways
- ARCC The most attractive feature of Ares Capital (NASDAQ: ARCC) today is probably its huge 10.5% dividend yield.
- Ares Capital issues shares to the public, and those shares will continue to exist until it repurchases them.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
ARCC The most attractive feature of Ares Capital (NASDAQ: ARCC) today is probably its huge 10.5% dividend yield. However, investors need to fully understand what supports that lofty yield before buying this stock. And recognize that the dividend has been cut before. Here's why the test the private credit markets are facing is so important for Ares Capital right now.
Ares Capital issues shares to the public, and those shares will continue to exist until it repurchases them. In this way, the business development company (BDC) has permanent capital. The stock price may rise and fall, but nobody can force Ares Capital to return their cash. That's an important dynamic as you watch non-public private credit funds limit redemptions.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »