ARCC - Ares Capital: Floating Interests Would Be Affected By Rate Cuts
2024-04-30 00:29:55 ET
Summary
- Ares Capital is the largest business development company in the world and has matched the S&P 500 total return in the last five years.
- 69% of the portfolio is held in floating loans, which would receive lower benchmark interest rates when rates begin to fall. Additionally, ARCC stock is trading at its 52-week-high.
- Based on a cyclical dividend at its peak, along with the aforementioned factors, I rate this business development company as a sell.
Ares Capital ( ARCC ) is the largest business development company ((BDC)) in the world with $12.6 billion in market cap and a portfolio that, measured at fair value, was worth $22.9 billion in Q4 2023 holding different sub-asset classes among 505 portfolio companies. Currently, this BDC offers a dividend yield of 9.2%, most recent payout ratio of 71.9% and Seeking Alpha's dividend safety score of C+....
Ares Capital: Floating Interests Would Be Affected By Rate Cuts