Ares Capital, 10% dividend yield held up
Ares Capital’s 2026year 1quarterly core earnings were lower than its dividend. The company said it still had room to maintain the dividend when carried-over earnings were taken into account.
Ares Capital said its 2026year 1quarterly core earnings were 0.47The quarterly dividend was 0.48per share. Core earnings alone did not fully cover the dividend.
The company expressed confidence in the sustainability of its dividend. It said the dividend exceeded earnings when net realized gains and excess earnings carried over from previous periods were included. The dividend yield was quoted at 10%.
Ares Capital is a business development company. It lends money to or invests in small and privately held companies, then distributes interest and investment returns to shareholders. For companies of this kind, dividend stability is central to investment decisions.
The company said the quality of its investment portfolio was healthy. It said non-accrual loans, on which borrowers are unable to make interest payments, remained at a low level. No signs of a significant increase in loan delinquencies were presented.
Management expected market conditions to improve going forward. This outlook is based on the possibility of improved loan demand and investment exit conditions. The company maintained its position that it could continue its current dividend policy.
The shares are trading below net asset value. Net asset value refers to the value remaining for shareholders after subtracting debt from the company's investment assets. This discounted price was cited as a point of interest for investors who prioritize dividends.
Sources: The Motley Fool
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