Image Source: Pixabay

Ares Capital (ARCC) operating in the capital markets industry, is a United States-based closed-ended specialty finance company.

Its investment objective is to generate both current income and capital appreciation through debt and equity investments.

This business development company focuses on investing primarily in U.S. middle-market companies with investment opportunities as well as in larger companies.

Its portfolio comprises of first-lien senior secured loans, second-lien senior secured loans, and mezzanine debt (subordinated unsecured loan), which may include equity components that are diversified by industry and sector.

The company may invest in preferred and common equity investments to a lesser proportion. Its revenue mainly consists of interest and dividend income received from investments.

It focuses on investments in the Northeast, Mid-Atlantic, Southeast, and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office.

The company was founded in 2004 and is headquartered in Los Angeles.

Three key data points gauge Ares Capital or any dividend-paying firm.

The key three are:

(1) Price

(2) Dividends

(3) Returns

Those three keys also best tell whether any company has made, is making, and will make money.

ARCC Price

Share price increased about 42.3% in the past year from $20.36 to $23.18, as of Friday’s market close.

In the past 5 years the company’s share price has ranged from $8.00 to $23.22, its all-time high, reached Friday, January 17th.

If shares trade in the range of $20.00 to $25.00 this next year, the recent $23.13 share price might grow to $23.85 Of course, ARCC shares could also drop about the same $0.72 estimated amount, or more.

My $0.72 price upside estimate is based on the average ARCC one-year price gain over the past five years.

ARCC Dividend

Ares Capital has paid variable quarterly dividends since January 26, 2005. The company’s most recent Q dividend of $0.48 was declared on October 30th, 2024 for shareholders of record prior to December 13th and the payout was made on December 30th. A forward-looking annual dividend of $1.92 yields 8.3% per Friday’s closing price.

ARCC Returns

Putting it all together, a $2.64 estimated annual gross gain per share shows up by adding ARCC’s annual $1.92 dividend to the estimated $0.72 annual price gain, totaling that $2.64 amount.

A little over $1000 buys 43 shares at Friday’s $23.13 share price.

A $10 broker fee (if charged), collected half at purchase and half at sale, might take about $0.23 per share out of the $2.64 gross gain to give us a net gain of $2.41 X 43 shares = $103.63 for about a 10.35% estimated net gain on the year.

Furthermore, the $83.00 annual estimated dividend income from $1k invested in ARCC is over 3.5 times more than the $23.13 single-share price. By these numbers, ARCC may be an ideal financial dividend dog.

Therefore, you may choose to pounce on Ares Capital. It is a 21-year-old quarterly variable dividend-paying capital markets business development company with a 20-year dividend record.

The exact track of Ares Capital's future price and dividend will entirely be determined by market action and company finances.

Remember the best way to track dividend payments is through direct ownership of company shares.

More By This Author:

Current Report: NL Industries
Current Report: Kanadevia
Current Report: Global Ship Lease