Market Performance - BDCs were down slightly over the week, underperforming the broader income space [2] - BDCs delivered a total return of around 1% in April, a very respectable outcome [3] - BDC valuations are trading not far off their recent peaks, supported by strong earnings and high net income levels [4] Earnings Cycle Observations - Several BDCs experienced net income misses followed by stock price drops despite strong earnings reports and a stable BDC market [5] - FDUS Q1 Non-GAAP EPS of $0.59 missed by $0.01, leading to a post-announcement drop in stock price [5][6] - ARCC posted a slight Q1 earnings miss but saw a rise in NAV and investing activity, initially rallying before falling below pre-announcement levels [7] - GLAD reported NII of $0.25 and total investment income of $24M, missing by $0.15M, resulting in a post-release drop with partial recovery [8] - TSLX Q1 Non-GAAP EPS of $0.52 missed by $0.07, leading to a sizable drop without much recovery [9] NAV and Valuation Dynamics - NAVs of ARCC, GLAD, and TSLX rose over the quarter by 1.5%, 3%, and 0.8% respectively, while FDUS NAV was flat [10] - ARCC sold off 3%, TSLX by 4%, and GLAD by 5.5% in valuation terms, despite the broader sector being essentially flat [10] - Long-term BDC performance is largely a function of NAV, with high-performing BDCs typically showing consistent NAV growth [11] Company-Specific Updates - GLAD reported a slight fall in net income but a 3% rise in NAV due to net unrealized appreciation, with non-accruals rising to 1.8% [13] - GLAD's next dividend doubled due to a stock split, though net income metrics were reported based on the old number of shares [14] - ARCC posted good numbers with a slight decline in net income but a 1.5% rise in NAV, with non-accruals ticking higher to 0.7% [14] - ARCC closed the week at a valuation of around 106%, slightly below the sector average but above the median [15] Market Themes - The earnings cycle has shown a pattern of net income misses leading to stock price drops, potentially influenced by bot trading behavior [11] - Adding BDCs whose price drops on a slight income miss but an NAV gain could be a good contrarian trade for income investors with a longer-term outlook [11]

These two dividend stocks have an average yield of 9.62% and can be an excellent addition to your portfolio today.If you're looking to generate passive income for your portfolio, look no further than dividend stocks. High-yield dividend stocks can be an excellent source of income while you sleep. But they offer another benefit: They tend to outperform the broader market.According to a recent study by Hartford Funds, in collaboration with Ned Davis Research, analysts found that dividend-paying companies have ...

Overview - The Business Development Company (BDC) sector has performed well in a higher interest rate environment, but many popular BDCs are trading at significant premiums to NAV [1] - Barings BDC (BBDC) focuses on middle market companies with EBITDA between $10M to $75M, generating income through a portfolio of debt investments, primarily first lien senior secured debt [1] Performance & Valuation - BBDC's total return remains positive due to its high dividend yield, but its price change lags behind peers like Main Street Capital and Ares Capital [2] - BBDC trades at a 3-year average discount to NAV of -16.4%, which is larger than usual for the sector [3][4] - The share price has nearly recovered to its pre-pandemic level of $10 per share, despite NAV growth over time [3] - The company's NAV increased slightly to $11.44 per share in Q1 2024, up from $11.28 in Q4 2023 [5] Dividend - BBDC's dividend yield is 10.8%, well-covered and increased over the last year and a half due to higher interest rates boosting interest income [2] - The dividend has grown at a CAGR of 10.33% over the last 5 years, with no cuts during the 2020 pandemic [16] - Q1 2024 NII was $0.28 per share, providing a dividend coverage of 108% [15] Portfolio & Strategy - BBDC's portfolio is highly diversified across industries, with 16% in finance and insurance, 15% in services, and 12% in high-tech industries [6] - The portfolio consists of 337 companies worth $2.53B, with a weighted interest coverage ratio of 2.2x, indicating resilience to elevated interest rates [6] - 66% of the portfolio is first lien senior secured debt, with 6% second lien debt, providing high repayment priority in case of bankruptcies [6] - 16% of the portfolio is equity exposure, which carries higher risk but also potential for higher returns [6] Risk Profile - BBDC's non-accrual rate is 0.3% of assets at fair value, significantly lower than peers like Golub Capital (1.5%) and Fidus Investment (3.1%) [7] - 21% of investments are rated 3-5 on BBDC's internal scale, indicating weaker credit quality, but 9% are rated 1, showing improvement [9] Financials - Q1 2024 NII was $0.28 per share, while net income per share was $0.41 [11] - Total investment portfolio at fair value increased slightly to $2,527.5M from $2,488.7M in the prior quarter [11] - Total investment income grew 4% YoY to $69,807, with operating expenses rising to $40,204 [14] - NAV grew 2.42% YoY to $11.44 per share in Q1 2024, up from $11.17 in Q1 2023 [14] Takeaway - BBDC is a high-quality BDC trading at a discount to NAV (-14.6%), making it an attractive entry point [18] - The company benefits from higher interest rates, with 87% of its debt investments in floating rate loans, leading to increased NII [13] - BBDC's portfolio construction and low non-accrual rate demonstrate improvements since the merger with Barings [18]

Ares Capital (ARCC) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Over the past month, shares of this private equity firm have returned +1.3%, compared to the Zacks S&P 500 composite's -0.2% change. During this period, the Zacks Financial - SBIC & Commercial Industry industry, which Ares Capital falls in, has gained 3.3%. The key question now is: What could be the stock's future dire ...

andresr/E+ via Getty ImagesSince the moment when the Fed decided to combat the inflation with several interest rate hikes in a quite rapid fashion, the private credit space started to flourish. The overall reason for this could be explained by the dynamics that are macro specific and private credit player specific. From the macro side, it was more about the consequences of struggling banking sector that in turn offered private credit firms an opportunity to step in and fill the supply and demand gap. Al ...

Shares of Ares Capital Corporation (ARCC) gained 1.2% following the release of its first-quarter 2024 results. Core earnings of 59 cents per share met the Zacks Consensus Estimate. The bottom line reflects a rise of 3.5% from the prior-year quarter.Results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt the results to an extent.GAAP net income was $449 million or 76 cents per share, ...

Income investors can buy in May and go away with these stocks.The adage "sell in May and go away" hasn't always been wise advice. It's especially impractical for income investors who need to have their money working for them. Instead of selling stocks in May, income investors could be better off buying.Fortunately, you have plenty of good picks from which to choose, and many of them offer especially juicy dividend yields. Here are my five favorite high-yield dividend stocks to buy in May.1. Ares CapitalAres ...

Ares Capital (NASDAQ:ARCC) Q1 2024 Earnings Conference Call May 1, 2024 10:00 AM ET Company Participants John Stilmar - Partner, Co-Head of Public Markets IR Kipp DeVeer - CEO Scott Lem - CFO Mitch Goldstein - Co-President Kort Schnabel - Co-President, Los Angeles Conference Call Participants John Hecht - Jefferies Finian O'Shea - Wells Fargo Melissa Wedel - JPMorgan Casey Alexander - Compass Point Paul Johnson - KBW Mark Hughes - Truist Erik Zwick - Hovde Group Robert Dodd - Raymond James Operator Good mor ...

Ares Capital (ARCC) reported $701 million in revenue for the quarter ended March 2024, representing a year-over-year increase of 13.4%. EPS of $0.59 for the same period compares to $0.56 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $701.4 million, representing a surprise of -0.06%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.59.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how th ...

Ares Capital (ARCC) came out with quarterly earnings of $0.59 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.56 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this private equity firm would post earnings of $0.59 per share when it actually produced earnings of $0.63, delivering a surprise of 6.78%.Over the last four quarters, the company has surpassed consensus EPS estimates three times.Ares Capital, which b ...