Kasia75/iStock via Getty Images Ares Capital (NASDAQ:ARCC), a very large business development corporation ('BDC'), continues to report stellar earnings when compared to the size of the dividend. We publish extensively about Ares, in large part because this is by far our largest BDC holding. Ares, in a simple description, thrives on two market conditions, demand strength, or the economy and interest rates. The company employs a lot of floating rate loans with spreads tending to increase under higher rates. I ...

r RomoloTavani The two best publicly traded business development companies based on long-term total return performance are Capital Southwest (CSWC) and Main Street Capital (MAIN). As you can see in the chart below, they have both generated enormous long-term total returns that completely leave the S&P 500 (SPY) and the broader BDC sector (BIZD) in the dust. Data by YCharts We previously discussed CSWC's strengths here and MAIN's strengths here. In this article, we will discuss what makes them such effective ...

Vertigo3d Buying blue chip stocks can be a path to attaining wealth, but it can also come with plenty of pitfalls. That’s why it’s important to set a distinction between the company and its stocks. For example, high-flying winners of today like Nvidia (NVDA) are indeed great companies, but only for those who believe that the stock is deserving of the many multiples of earnings that it currently trades at. For more conservative income investors, buying blue chips that also pay a meaningful dividend and a ...

Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.A favorable consumer price index report for April lifted investors' hopes for rate cuts from the Federal Reserve – and that environment could prove favorable for dividend-paying stocks.A lower interest rate environment makes dividend payers more compelling to income investors, especially because those stocks would be offering competitive yields versus those of Treasurys.Recent results reported by ...

MAXIM ZHURAVLEV/iStock via Getty Images Co-authored by Treading Softly. Amongst the pantheon of gods, demigods, and their various children throughout Greek mythology, two of the gods are rarely seen together. One is the god who we often attribute to the sun, and the other is the god of war. Apollo and Ares have a unique relationship, only really appearing in a few myths together, and otherwise being completely apart from each other, but playing important roles, nonetheless. When it comes to the market, ...

High-yield dividend stocks are particularly noteworthy in income investing. Seven stocks, all with yields over 7%, may spark rapid expansion in various industries.The first one is a massive real estate company specializing in cannabis operators, and it has a portfolio that spans many states and more than a hundred locations. The second one then becomes a benchmark for asset management. It has a constant net income and has moved toward safe first-lien investments. The third is a major player in consumer stap ...

Market Performance - BDCs were down slightly over the week, underperforming the broader income space [2] - BDCs delivered a total return of around 1% in April, a very respectable outcome [3] - BDC valuations are trading not far off their recent peaks, supported by strong earnings and high net income levels [4] Earnings Cycle Observations - Several BDCs experienced net income misses followed by stock price drops despite strong earnings reports and a stable BDC market [5] - FDUS Q1 Non-GAAP EPS of $0.59 missed by $0.01, leading to a post-announcement drop in stock price [5][6] - ARCC posted a slight Q1 earnings miss but saw a rise in NAV and investing activity, initially rallying before falling below pre-announcement levels [7] - GLAD reported NII of $0.25 and total investment income of $24M, missing by $0.15M, resulting in a post-release drop with partial recovery [8] - TSLX Q1 Non-GAAP EPS of $0.52 missed by $0.07, leading to a sizable drop without much recovery [9] NAV and Valuation Dynamics - NAVs of ARCC, GLAD, and TSLX rose over the quarter by 1.5%, 3%, and 0.8% respectively, while FDUS NAV was flat [10] - ARCC sold off 3%, TSLX by 4%, and GLAD by 5.5% in valuation terms, despite the broader sector being essentially flat [10] - Long-term BDC performance is largely a function of NAV, with high-performing BDCs typically showing consistent NAV growth [11] Company-Specific Updates - GLAD reported a slight fall in net income but a 3% rise in NAV due to net unrealized appreciation, with non-accruals rising to 1.8% [13] - GLAD's next dividend doubled due to a stock split, though net income metrics were reported based on the old number of shares [14] - ARCC posted good numbers with a slight decline in net income but a 1.5% rise in NAV, with non-accruals ticking higher to 0.7% [14] - ARCC closed the week at a valuation of around 106%, slightly below the sector average but above the median [15] Market Themes - The earnings cycle has shown a pattern of net income misses leading to stock price drops, potentially influenced by bot trading behavior [11] - Adding BDCs whose price drops on a slight income miss but an NAV gain could be a good contrarian trade for income investors with a longer-term outlook [11]

These two dividend stocks have an average yield of 9.62% and can be an excellent addition to your portfolio today.If you're looking to generate passive income for your portfolio, look no further than dividend stocks. High-yield dividend stocks can be an excellent source of income while you sleep. But they offer another benefit: They tend to outperform the broader market.According to a recent study by Hartford Funds, in collaboration with Ned Davis Research, analysts found that dividend-paying companies have ...

Overview - The Business Development Company (BDC) sector has performed well in a higher interest rate environment, but many popular BDCs are trading at significant premiums to NAV [1] - Barings BDC (BBDC) focuses on middle market companies with EBITDA between $10M to $75M, generating income through a portfolio of debt investments, primarily first lien senior secured debt [1] Performance & Valuation - BBDC's total return remains positive due to its high dividend yield, but its price change lags behind peers like Main Street Capital and Ares Capital [2] - BBDC trades at a 3-year average discount to NAV of -16.4%, which is larger than usual for the sector [3][4] - The share price has nearly recovered to its pre-pandemic level of $10 per share, despite NAV growth over time [3] - The company's NAV increased slightly to $11.44 per share in Q1 2024, up from $11.28 in Q4 2023 [5] Dividend - BBDC's dividend yield is 10.8%, well-covered and increased over the last year and a half due to higher interest rates boosting interest income [2] - The dividend has grown at a CAGR of 10.33% over the last 5 years, with no cuts during the 2020 pandemic [16] - Q1 2024 NII was $0.28 per share, providing a dividend coverage of 108% [15] Portfolio & Strategy - BBDC's portfolio is highly diversified across industries, with 16% in finance and insurance, 15% in services, and 12% in high-tech industries [6] - The portfolio consists of 337 companies worth $2.53B, with a weighted interest coverage ratio of 2.2x, indicating resilience to elevated interest rates [6] - 66% of the portfolio is first lien senior secured debt, with 6% second lien debt, providing high repayment priority in case of bankruptcies [6] - 16% of the portfolio is equity exposure, which carries higher risk but also potential for higher returns [6] Risk Profile - BBDC's non-accrual rate is 0.3% of assets at fair value, significantly lower than peers like Golub Capital (1.5%) and Fidus Investment (3.1%) [7] - 21% of investments are rated 3-5 on BBDC's internal scale, indicating weaker credit quality, but 9% are rated 1, showing improvement [9] Financials - Q1 2024 NII was $0.28 per share, while net income per share was $0.41 [11] - Total investment portfolio at fair value increased slightly to $2,527.5M from $2,488.7M in the prior quarter [11] - Total investment income grew 4% YoY to $69,807, with operating expenses rising to $40,204 [14] - NAV grew 2.42% YoY to $11.44 per share in Q1 2024, up from $11.17 in Q1 2023 [14] Takeaway - BBDC is a high-quality BDC trading at a discount to NAV (-14.6%), making it an attractive entry point [18] - The company benefits from higher interest rates, with 87% of its debt investments in floating rate loans, leading to increased NII [13] - BBDC's portfolio construction and low non-accrual rate demonstrate improvements since the merger with Barings [18]

Ares Capital (ARCC) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Over the past month, shares of this private equity firm have returned +1.3%, compared to the Zacks S&P 500 composite's -0.2% change. During this period, the Zacks Financial - SBIC & Commercial Industry industry, which Ares Capital falls in, has gained 3.3%. The key question now is: What could be the stock's future dire ...