Latest news with #BDCs
Yahoo
5 hours ago
- Business
- Yahoo
Should You Buy Ares Capital Stock While It's Below $25?
Key Points Ares Capital offers an exceptionally juicy dividend. It's a clear leader in a fast-growing market. The stock's valuation is also compelling. 10 stocks we like better than Ares Capital › You won't find many large-cap, ultrahigh-yield dividend stocks with relatively low share prices that are popular on Wall Street. However, Ares Capital (NASDAQ: ARCC) fits the bill. Eleven of the 14 analysts surveyed by LSEG (OTC: LNST.Y) in July recommended Ares Capital as a "buy" or a "strong buy." Should you buy Ares Capital stock while it's below $25? Here are four reasons why I think the answer is a resounding "yes." 1. A fantastic dividend There was no way I wasn't going to begin the discussion of why to invest in Ares Capital without mentioning its fantastic dividend. The stock offers a juicy dividend yield of 8.36%. A sky-high yield is nothing new for Ares Capital. Over the last 10 years, its average yield was 9.32%. Want even better news? Ares Capital has maintained a steady or growing dividend for over 15 consecutive years. It has increased the dividend payout by 20% over the past five years. I don't expect this great dividend track record to end anytime soon. Ares Capital is a business development company (BDC), which means it must return at least 90% of its income to shareholders as dividends to avoid paying federal income taxes. As long as the company is profitable, it's going to pay dividends. 2. A growing market BDCs provide capital primarily to middle-market businesses with annual revenue between $10 million and $1 billion. Their main vehicle is direct lending. And this market is growing rapidly. According to State Street (NYSE: STT) Investment Management, the private credit market has nearly tripled over the last decade to around $2 trillion. Most of this growth is due to direct lending. Morgan Stanley (NYSE: MS) projects that the private credit market will grow to $2.8 trillion by 2028. McKinsey estimates that the total addressable market for private credit could top $30 trillion in the U.S. alone. I believe Ares Capital is in the right business at the right time. 3. An industry leader Ares Capital is also the industry leader in the right business at the right time. It's the largest publicly traded BDC in the U.S., with a market cap of close to $16 billion. The stock has delivered an average annual total return of 13% since its initial public offering in 2004. That's roughly 80% higher than the S&P 500's (SNPINDEX: ^GSPC) total return during the period. Over the last 10 years, Ares Capital has ranked No. 1 in annualized stock-based total return among its peer group. I attribute this success to Ares Capital's diversified, high-quality portfolio. The BDC currently has 566 companies in its $27.1 billion portfolio. The average position size is only 0.2%, with the largest investment making up around 2% of total assets. Roughly 68% of the portfolio consists of senior secured loans, which are secured by collateral and have the highest priority for repayment. It's also reassuring that Ares Capital is supported by an industry-leading external manager, Ares Management (NYSE: ARES). At last year's Alternative Credit Awards, Ares Management was named the 2024 Alternative Fund Manager of the Year. Private Debt Investor magazine selected Ares Management as the 2024 Global Fund Manager of the Year. 4. A compelling valuation Another reason to buy Ares Capital while it's below $25 is its compelling valuation. And I'm not talking about the share price itself. Ares Capital's forward price-to-earnings ratio is only 11.3, according to LSEG. That's roughly half the forward earnings multiple of the S&P 500. Granted, BDCs tend to trade at lower valuations. But keep in mind that Ares Capital has trounced the S&P 500 over the long term. With its ultrahigh dividend yield, combined with a leading position in a fast-growing industry, I think the price is right for this outstanding BDC stock. Should you invest $1,000 in Ares Capital right now? Before you buy stock in Ares Capital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Ares Capital wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $641,800!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,023,813!* Now, it's worth noting Stock Advisor's total average return is 1,034% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Keith Speights has positions in Ares Capital. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Should You Buy Ares Capital Stock While It's Below $25? was originally published by The Motley Fool
Globe and Mail
a day ago
- Business
- Globe and Mail
Top 5 Dividend ETFs For 2025
Want expert insights on REITs and BDCs? Join Colorado Wealth Management Fund's email list—widely regarded as the top REIT analyst on Seeking Alpha. Stay ahead of the market with exclusive updates! [ Sign Up Now ] These five dividend ETFs continue to offer low expense ratios, solid sector diversification, and reliable dividend income in 2025. For investors looking to build a durable equity income portfolio, these ETFs remain among the top choices. While they still leave out a few useful sectors (real estate, utilities), they make a strong starting point for long-term investors who want their portfolio to actually pay them. SCHD: Still a Favorite for Quality and Yield The Schwab U.S. Dividend Equity ETF (SCHD) remains one of the most popular dividend ETFs for good reason. With an expense ratio of just 0.06%, it provides exposure to high-quality U.S. companies with consistent dividend histories. SCHD leans heavily into consumer staples and industrials, while underweighting financials and avoiding real estate altogether. It's a great core holding for long-term investors, but those building a more balanced portfolio may want to add complementary exposure to sectors SCHD leaves out - like real estate, utilities, or floating-rate preferred shares. VYM: The Classic High-Yield Workhorse The Vanguard High Dividend Yield ETF (VYM) continues to be a strong option for income-focused investors. Also carrying a rock-bottom 0.06% expense ratio, VYM holds over 400 U.S. stocks with above-average dividend yields. It includes solid exposure to financials and energy - two sectors often underrepresented in other dividend-focused funds. VYM doesn't try to outsmart the market - it focuses on companies that actually pay. That's why it remains one of the most consistent picks in the dividend ETF space. It also makes a great pairing with SCHD for those who want both quality and yield in their portfolio. VIG: For Dividend Growth Enthusiasts The Vanguard Dividend Appreciation ETF (VIG) doesn't chase yield - it focuses on companies with a long history of increasing dividends. With a 0.06% expense ratio, VIG offers exposure to companies that tend to be more stable and less cyclical, but also leans heavily into the industrials sector. VIG skips real estate and carries minimal energy exposure, so it may not be ideal as a standalone holding. However, for investors looking to prioritize long-term dividend growth over raw yield, it makes a lot of sense - especially when paired with something more income-oriented like HDV or SCHD. DGRO: Balanced, Understated, Effective The iShares Core Dividend Growth ETF (DGRO) is often overlooked but deserves more attention. It blends dividend growth with moderate yield and includes meaningful exposure to financials and tech. The fund charges a slightly higher expense ratio of 0.08%, but it makes up for it with a well-diversified portfolio that avoids major concentration risk. DGRO doesn't swing for the fences, but it rarely strikes out either. For investors who want a middle-of-the-road fund that complements either high-yield or high-growth ETFs, DGRO is a great pick in 2025. HDV: High-Yield Defense When You Need It The iShares Core High Dividend ETF (HDV) is the most defensive option on this list. It focuses on companies with stable earnings and high dividend yields, and tends to lean into sectors like healthcare and consumer staples. Its expense ratio is 0.08%, and its yield remains one of the highest among the big-name dividend ETFs. HDV tends to underweight financials and avoids energy and real estate. That makes it a bit less well-rounded, but great for income investors who want lower beta and a strong defensive tilt. One Glaring Omission: Real Estate (Again) As with previous years, none of these five ETFs offers meaningful exposure to real estate. That's a recurring blind spot - and an easy one to fix. Investors can add a fund like the Vanguard Real Estate ETF (VNQ) or choose from individual REITs like (O), (NNN), or (WPC) to round out the portfolio. The yield from quality REITs also pairs well with the more defensive holdings in this group. It's important to note that we easily beat our benchmark from inception. That includes our choices or REITS, mREITS, BDCs, and preferred shares. Bonus Pick: Want Tech Exposure Without Giving Up Your Dignity? While none of the five ETFs above offer real exposure to big-name tech stocks, investors who want to stay connected to the modern economy can consider the Vanguard Information Technology ETF (VGT). It's not a dividend fund, but it includes (AAPL), (MSFT), (NVDA), (TSLA), and other heavyweights at a low cost (0.10% expense ratio). Adding VGT won't do a lot to boost your income via dividends, but it can add some long-term capital appreciation while helping you keep up with what the kids are doing. Final Thoughts The five core dividend ETFs - SCHD, VYM, VIG, DGRO, and HDV - continue to provide excellent foundations for income-oriented portfolios in 2025. They've stood the test of time with low fees, strong management, and reliable performance. You'll still need to plug a few holes (real estate, utilities, maybe preferred shares), but you're starting with a very solid base. Now go get your dividends. Join The REIT Forum by Colorado Wealth Management Fund, trusted by over 60,000 investors for expert analysis on REITs, BDCs, and preferred shares. This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will. Disclosure: I currently have a position in O . I may frequently trade in the preferred shares of any mortgage REIT and occasionally in the common shares.
Globe and Mail
7 days ago
- Business
- Globe and Mail
How to Retire in 2025 Without Eating Cat Food (Even If You Blew It in 2022)
Want expert insights on REITs and BDCs? Join Colorado Wealth Management Fund's email list—widely regarded as the top REIT analyst on Seeking Alpha. Stay ahead of the market with exclusive updates! [ Sign Up Now ] Let's be honest - 2022 wasn't fun for most investors. Stocks dropped, bonds dropped, and a lot of retirement plans quietly hit the 'recalculate' button. Fortunately, the years since have given investors a much better environment to work with: higher yields, recovering markets, and, if you built the portfolio right, steady income that doesn't depend on guessing the next move from the Fed. If you're aiming to retire in 2025, you're not late. You're right on time to use the market's rebound, lock in solid income, and sidestep the panic that keeps financial headlines interesting. Whether you're a few months out or still charting the path, there's a way to do this that doesn't involve spreadsheets, stress, or canned pet food. You Don't Need $5 Million to Retire (But If You Have It, Great) There's a persistent myth that you need $5 million and a part-time consulting gig to retire 'safely.' That's great for people who crushed IPOs in 2012. The rest of us are focused on something a little more practical: recurring income from positions that don't require watching the S&P 500 like a hawk. With high-quality equity REITs like (FRT) and (AVB), or monthly dividend payers like (MAIN), you can create consistent cash flow that doesn't fall apart the second a tech stock sneezes. What You Actually Want: Stability Mortgage REITs might make for exciting charts, but they aren't long-term income plays. They're built for traders who can stomach volatility and don't mind watching price swings over their morning coffee. If that's not your retirement vibe, you're not alone. The better alternative? Preferred shares - especially those from mortgage REITs and BDCs. They often yield 7% to 9% (sometimes more), trade below call value, and offer a level of price stability you're not going to get from common shares. When paired with solid equity REITs or BDCs, they form the backbone of a reliable income portfolio. Tickers like (NLY-F), (AGNCN), or (CIM-C) offer income without forcing you to play interest rate roulette on a weekly basis. BDCs: The Monthly Paycheck That Doesn't Complain Business Development Companies (BDCs) exist for one reason: to pay you. Some, like (ARCC) and (MAIN), have long histories of solid performance and responsible management. Others… well, let's say due diligence matters. Still, when selected carefully, BDCs provide exposure to private credit markets and hand over dividends like clockwork. Retirees love them. So do people who like getting paid 12 times a year. Just don't fall into the trap of reaching for yield at any cost. A 13% dividend from a company with a junk-grade portfolio isn't 'free money.' It's a warning label. Tech Stocks Let's address the elephant in the room. You clicked on this article, and maybe the algorithm helped because I dropped a few tickers like @AAPL, @NVDA, or @TSLA into the metadata. (AAPL), (NVDA), and (TSLA) are big tech companies and potentially good ones. Great even. But they may not be the best fir for your retirement income plan. They don't pay meaningful dividends. They don't send you checks while you sip coffee. What they do offer is volatility and optional regret. Retirement Isn't Magic - It's Math (With a Little Margin of Safety) If you're expecting to cover 100% of your expenses from investment income, you'll want a mix of: Then you add in Social Security, maybe a pension or annuity, and you've got a real plan - not a Pinterest board of dreams. And yes, inflation still matters. So does sequence of returns risk. But those are challenges you plan for, not reasons to wave the white flag and keep working until 78. Final Thoughts: No Cat Food Required Retirement in 2025 isn't reserved for people who aced every financial decision since 1995. It's entirely possible - even if you made a few wrong turns, even if you started late, even if you learned the hard way that 8% yield doesn't mean 8% safety. Stick to high-quality income payers. Build a portfolio with actual cash flow. Respect risk - but don't fear it. And above all else: don't let market narratives convince you that it's too late. You don't need a yacht. You just need freedom—and maybe a few dividend checks that let you laugh every time you pass the cat food aisle. Join The REIT Forum by Colorado Wealth Management Fund, trusted by over 60,000 investors for expert analysis on REITs, BDCs, and preferred shares. This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will. Disclosure: No position in any stock discussed in this article . I may frequently trade in the preferred shares of any mortgage REIT and occasionally in the common shares.
Business Insider
02-07-2025
- Business
- Business Insider
Bank of Ghana injects $20 million into oil sector to support cedi and fuel supply
The Bank of Ghana (BoG) has disbursed $20 million to ten Bulk Oil Distribution Companies (BDCs) as part of its latest foreign exchange (FX) forward auction, reinforcing the central bank's efforts to stabilise the Ghanaian cedi and ensure consistent fuel availability. The Bank of Ghana has allocated $20 million to Bulk Oil Distribution Companies in a foreign exchange auction. The FX auction was priced at GH¢10.40 per US dollar and is part of a larger $120 million initiative. The next FX forward auction is scheduled for early July, allocating a further $20 million. Fixed rate auction targets petroleum sector The FX auction, held on Thursday, 26 June 2025, was priced at a fixed rate of GH¢10.40 per US dollar, with bids submitted in the range of GH¢10.00 to GH¢10.35. This forms part of a broader $120 million initiative launched by the central bank in April 2025, aimed at providing fortnightly dollar support to qualified BDCs throughout the second quarter. According to the BoG, the FX auction is a targeted response to external economic shocks, especially those related to fluctuating global oil prices. The measure is intended to reduce the burden on the interbank FX market by directly supplying foreign currency to the downstream petroleum sector. The central bank explained that this intervention is essential in preserving macroeconomic stability and containing inflationary pressures, particularly those driven by rising import costs in the energy sector. The BoG has scheduled the next FX auction for early July, with an additional $20 million earmarked for distribution to qualifying BDCs.
Forbes
15-06-2025
- Business
- Forbes
Private Equity For The People: 3 High-Yield BDCs Yielding Up To 13%
Dark orange glowing wireframe bull on stock market diagram background Let's invest like private equity pros without needing seven figures. Yes, that's right—PE-style starting for as little as $8. Plus, yields up to nearly 13%. No special access or options trades needed. Just a few clicks through our brokerage accounts buying regular ol' tickers. The sneaky dividend-dishing subjects? Meet business development companies (BDCs), publicly-traded firms that lend to small businesses. BDCs were invented by Congress years ago to create a new type of lender to small businesses. They were also given the same mandate as real estate investment trusts (REITs): Return at least 90% of taxable income back to shareholders in the form of dividends. And man, do they pay or what? BDC Yields Let's dive into three compelling BDCs that not only dish big dividends but also trade for less than the sum of their parts. BlackRock TCP Capital Corp. (TCPC) is a middle-market lender that favors middle-market companies with enterprise values of between $100 million and $1.5 billion. It has a fairly diverse portfolio of 146 companies across several 'less-cyclical' industries. TCPC's investment mix is heaviest in first-lien debt, at 83% of the portfolio; second-lien debt is another 7%, and 10% of its deals (at fair value) are in equity. The vast majority of its debt (94%) is floating-rate in nature, which is typical for many BDCs. That has its upsides and downsides. In a normal rising-rate environment (think 2015-19, not 2022-23), rising rates are generally good for BDCs that work heavily with floating-rate debt. The potential for declining rates (or actually declining rates)? Not so good. Also, as one might have guessed, TCPC has a connection to BlackRock (BLK)—specifically, it's externally managed by an indirect, wholly owned subsidiary of BlackRock (BLK). This connection allows it to access BlackRock's many resources, which in theory should make it a particularly competitive BDC. TCPC Total Returns I warned in November 2024 that BlackRock TCPC keeping its base dividend flat for a fifth consecutive quarter raised 'a little concern that TCPC's dividend might be plateauing.' Three months later, the BDC pulled the rug out from under its investors with a drastic dividend cut. That's despite a practice of pairing its base dividend with special dividends as profits allow. BlackRock TCPC's declines have opened up a generous 13% discount to NAV. And even with the reduced 25-cent-per-share base dividend (and an already announced 4-cent special dividend for Q1), the stock still yields a sky-high 13%. But TCPC hasn't exactly fixed what got it here. The dividend is more affordable, and the company's adviser is waiving a third of its fee through Q3. But it's still thick in non-accruals (loans that are delinquent for a prolonged period, usually 90 days), which even after improving this past quarter sit at an elevated 12.6% and 4.4% of the portfolio at cost and at fair value, respectively. Crescent Capital BDC (CCAP) is another BDC that's paired with (and enjoys the resources of) a larger investment company. Crescent Capital BDC is tied to global credit investment firm Crescent Capital Group, which itself specializes in below-investment-grade credit strategies. CCAP currently invests in 191 portfolio companies, with a penchant for private middle market companies. It's predominantly U.S.-focused, though it does have 9% portfolio exposure to Europe and a thin 2% exposure to Australian companies. It's similar to TCPC in that it primarily deals in first-lien debt (91%), and the vast majority (97%) is floating-rate in nature. The last time I looked at CCAP, I mentioned that it has quite the oddball dividend history: I'm afraid the dividend picture hasn't become any less complicated since then. Crescent Capital has kept up with its 42-cent-per-share base dividend. But the action in its special dividends has changed. The variable supplemental dividends, which had been around for six quarters, disappeared at the start of this year. At the same time, CCAP announced 5-cent specials for the first, second, and third quarters—but they're related to undistributed taxable income. So while it looks like CCAP's variable supplemental has just gotten a little smaller, in reality, it's not paying any supplementals (or, at least, it hasn't for the past two quarters). Those supplementals might not return for some time, either. Wall Street is increasingly worried about rate compression among BDCs, for one. CCAP itself, meanwhile, is running into increasing credit issues, a spate of new non-accruals, and the winding-down of the Logan joint venture, which was providing CCAP with some cash flows. At least investors are being realistic about Crescent Capital's dimming prospects of late, driving shares down to a wild 23% discount to NAV. This normally defensively positioned BDC hardly looks like the pinnacle of health right now, but a discount that deep (plus an 11% yield on the base dividend alone) could attract some bargain hunters. I'll start with PennantPark Floating Rate Capital (PFLT), which targets midsized companies that are 'profitable, growing and cash-flowing,' with a specific focus on firms that generate $10 million to $50 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA). Currently, PFLT's portfolio is 190 companies wide, and those 190 companies are supported by roughly 110 private equity sponsors. And while some BDCs are happy to invest in a wide variety of companies, 'value-added' BDCs that lend expertise tend to be more selective. In this case, PennantPark Floating Rate's interests lie in five primary categories: health care, software and technology, consumer, business services and government services. Most important, however, is what gives PennantPark Floating Rate Capital its name. While BDCs often deal with floating-rate first-lien debt, PFLT takes it to the max: About 90% of the portfolio is first-lien debt, virtually all of which is floating-rate in nature. (The remaining 10% is split 80/20 between equity co-investments and joint venture equity.) As I mentioned before, the Fed's flattening and eventual reduction in interest rates took a toll on many BDCs. PFLT Total Returns PFLT trades at a 6% discount to NAV; that's nice, but it almost feels like an optimistic valuation given the uncertainty facing the rate environment and PennantPark right now. On the upside, PFLT is actually a monthly dividend payer, and a generous one, too, at nearly 12%. On the downside, coverage of that dividend is getting awfully tight. In fiscal 2024 (its year ends in September), PFLT paid $1.23 per share on net interest income of $1.27 per share (a 97% NII payout ratio), generated from profits of $1.18 per share. It's expected to earn $1.21 per share and $1.18 per share over the next two years, and we can reasonably expect NII to be proportional. That's OK (not great) if all goes well, but a lot hinges on what the Federal Reserve does next—an open question. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
