Ares Capital

ARCC

Market cap $14.8B

Ares Capital Corporation is a business development company that lends to middle-market companies. Its 9% dividend yield makes it appealing for income investors.

Shares of beverage giant PepsiCo have been dragged lower for reasons that aren't apt to last much longer. Pipeline owner/operator Enterprise Products Partners owns a tollbooth business that's going to generate reliable revenue for more many, many more years.

Ares Capital offers a nearly 10% yield, trades below book value, and maintains strong dividend coverage with spillover income reserves. ARCC's portfolio is anchored in first-lien senior secured loans, supporting stable interest income and reducing the risk of a dividend cut. Despite sector-wide fears of rate cuts and lower net investment income, ARCC's spillover reserve covers about 66% of annual dividends, providing a safety cushion.

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Ares Capital (ARCC) and Blue Owl Capital (OBDC) are top BDCs offering double-digit dividend yields and strong portfolio diversification. OBDC stands out with a higher forward yield (~13.3%), superior industry diversification, and a deeper discount to book value than ARCC. Both ARCC and OBDC maintain robust dividend safety, with high percentages of senior secured loans and consistent payout histories.