Where Will Ares Capital Be in 5 Years?

Core Insights - Ares Capital is a business development company (BDC) known for its high dividend yield, but investors should consider more than just the yield when evaluating the stock [1][5] - The company has a strong backing from Ares Management and has demonstrated resilience, particularly during economic downturns [3][4] Company Overview - Ares Capital specializes in providing loans to smaller companies that lack access to more favorable capital options, with an average interest rate of 10.9% on its loans as of Q2 2025 [6] - The high-interest loans can be a significant financial burden for smaller companies, especially during economic recessions [7][8] Historical Performance - Ares Capital has a history of navigating financial crises effectively, having expanded its business during the Great Recession [4][12] - The company's dividend has shown volatility over time, with notable drops during economic downturns [10] Future Outlook - A recession in the next five years is considered likely, which may lead to a reduction in Ares Capital's dividend [11] - Despite potential challenges, Ares Capital is expected to remain operational and may use downturns as opportunities for growth [12]