Ares Capital: Below $22 and Still Breathing

by

My brother-in-law, bless his heart, is convinced the market is a casino. He sends me links to articles about meme stocks and dogecoin, as if I’m missing out on some kind of lucrative, chaotic fun. I try to explain the concept of dividend yields, of predictable income streams, but it’s like describing the color blue to someone who’s only ever seen gray. It’s exhausting. Which brings me to Ares Capital (ARCC 1.90%). It spent most of last year above $22. Then, like a forgotten houseplant, it dipped. And hasn’t really bothered to come back up. Now, it’s yielding over 9%. Which, in this climate, feels…substantial. Like finding a twenty in an old coat pocket.

I’m not saying it’s a sure thing. Nothing ever is. But I’ve been staring at spreadsheets, and honestly, the numbers are…calming. Ares Capital lends money to mid-sized companies, the kind that don’t always get a lot of attention. They’re not flashy tech startups, but the backbone of things. They need loans to expand, to hire, to just…exist. Ares provides that. And gets paid interest. It’s remarkably straightforward. Which, these days, feels revolutionary.

Growing, Slowly, Amidst the Murmur of Falling Rates

They’re a regulated investment company, which means they have to give almost all their profits back to us, the investors, in the form of dividends. It’s a good system, if you can stomach the paperwork. And they’ve been remarkably consistent about it. They’ve been growing their portfolio, even as everything else seems to be…shifting. Last year, they increased the value of their investments by a few billion. Not a fortune, but not nothing. The yield on those investments is down a bit, but the net asset value – that’s the real number, the one that keeps me up at night – has actually gone up. It’s a small increase, granted, but it’s an increase nonetheless. It feels…responsible.

Lower interest rates are, of course, a problem. When existing loans get paid off, they have to reinvest the money, and at lower rates. It’s like trying to recreate a perfect cup of coffee with slightly stale beans. They’ve been mitigating this by borrowing money at lower rates themselves, which is clever. They recently issued some new debt at 5.25%. It’s not glamorous, but it’s practical. And, frankly, I appreciate practicality.

A Quiet Opportunity, Not a Get-Rich-Quick Scheme

Apparently, banks are disappearing. Not in a dramatic, apocalyptic way, but slowly, quietly, consolidating and failing. Which leaves a gap in the market. Companies need loans, and if the banks aren’t providing them, someone else will. Ares Capital is positioning itself to fill that gap. They estimate there’s trillions of dollars in potential lending opportunities. It’s a big number. I’m not usually one for big numbers. They tend to make me anxious. But this one feels…manageable. They’ve been raising capital, making new investments, and generally keeping things afloat. It’s not a wild ride, but it’s a steady one.

They’ve been paying dividends for sixteen years. Sixteen years! That’s longer than my last relationship. It’s a level of commitment I admire. They raised over a billion dollars in new debt during the last quarter. It’s not exciting, but it’s reassuring. They made almost four billion dollars in new investment commitments, more than offsetting the money they paid out. It’s like a well-run household budget. Not glamorous, but essential.

Below $22? Worth a Look, Perhaps.

Ares Capital has managed to grow its net asset value despite the lower interest rates. That’s a good sign. It suggests they’re making smart decisions, managing risk effectively. It makes them a more attractive investment, at least in my opinion. It’s not going to make me rich overnight. It’s not going to fund a lavish retirement. But it might provide a steady stream of income, a little bit of security in a world that feels increasingly unstable. And, honestly, that’s enough. I’m buying a little bit, while it’s still below $22. Just enough to feel like I’m doing something sensible. And to silence my brother-in-law, at least for a little while.

Read More

2026-01-26 21:13