BDCX - Ares Capital's NAV Valuation And Dividend Versus 14 BDC Peers - Part 2 (Includes Q2 + Q3 2024 Dividend Projection)

2024-03-27 03:38:01 ET

Summary

• Part 2 of this article compares ARCC’s recent dividend per share rates, yield percentages, and several other highly detailed (and useful) dividend sustainability metrics to 14 other BDC peers.
• This includes a comparative analysis of ARCC’s cumulative undistributed taxable income ratio, percentage of floating-rate debt investments, recent weighted average annualized yield, and weighted average interest rate on outstanding borrowings.
• ARCC’s dividend sustainability remains one of the highest in the sector. When comparing/analyzing all metrics (including additional metrics not mentioned), ARCC is currently deemed to be appropriately undervalued (HOLD).
• Most BDCs will continue to have sustainable (and some special periodic) dividends over the foreseeable future. However, credit risk will continue to rise during 2024 (something I will continually monitor/model).
• Simply put, contrary to recent speculation, ARCC’s dividend remains very safe. In addition, ARCC is only one of several sector peers with a fairly attractive valuation.

Focus of Article:

The focus of this two-part article is a very detailed analysis comparing Ares Capital Corp. ( ARCC ) to some of the company’s business development company (“BDC”) peers (all sector peers I currently fully cover). I am writing this two-part article due to the continued requests that such an analysis be specifically performed on ARCC and some of the company’s BDC peers at periodic intervals. For readers who just want the summarized conclusions/results, I would suggest to scroll down to the “Conclusions Drawn” section at the bottom of each part of the article.

PART 1 of this article analyzed ARCC’s recent quarterly results and compared several of the company’s metrics to 14 other BDC peers. PART 1 helps lead to a better understanding of the topics and analysis that will be discussed in PART 2. The link to PART 1’s analysis is provided below:

REIT Forum Version (Expanded Analytics/Sorted Tables): ...

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