fool.com·May 16, 2026
Ares Capital (NASDAQ: ARCC) attracts investors with its high 10% yield, significantly higher than the S&P 500's 1.1%, but potential investors should understand the company's business model as a business development company (BDC), which typically offers high yields.
Ares Capital offers a compelling 10% yield, significantly higher than the S&P 500's 1.1%, due to its structure as a Business Development Company (BDC), which is designed to pass dividends to investors in a tax-advantaged way. While this high yield is not indicative of distress, it's crucial to understand the BDC business model and evaluate Ares Capital against its competitors, some of which may offer even higher yields.