Should I Buy Ares Capital Corporation (ARCC)? Finance YouTuber Analysis

The YouTuber recommends Ares Capital Management (ARCC), a BDC, despite its 2.6% dividend yield, due to strong one-year and five-year dividend growth rates. He explains that BDCs, like REITs, must return most cash flow to investors, making the 101% payout ratio sustainable given the 25% earnings growth and other fundamentals.

“the 101% is a little high but it is sustainable here with the 25% earnings growth as well as some of the other fundamentals for the company”

The YouTuber suggests Ares Capital Corporation, another BDC, for its 9.9% dividend yield and strategy of using special dividends to maintain a stable regular dividend. The company has a diversified portfolio across various industries, with a strong weighted average portfolio yield of 11%, which is well above its dividend payout. A significant backlog of deals ensures continued cash flow and dividend sustainability.

“Ares has a backlog of deals worth over 425 million dollars to refill that loan and Equity position so it should be able to keep that cash flow running it have no problem growing the dividend or coming up on my favorite high-yield dividend stock.”