8% Yield, Rising Price Targets

If you're looking for exposure to privately-held companies business development companies offer that slice of the financial markets to retail investors. We've covered several BDCs in our recent articles - this is one of the pockets of the market which was beaten down for a good part of 2020 due to investors becoming very wary about how well the portfolio of BDC companies would fare in the pandemic lockdown economy. This stock yields 8.33% with 1.07X trailing dividend coverage. Dividend coverage, earnings comps, and valuations/leverage and profitability vs. the BDC industry are covered in this article.

Ares Capital Corp. (ARCC) is a BDC specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, healthcare products and services, and information technology service sectors. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million. It IPO'd in 2004.

Source: Seeking Alpha

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