8.6%-Yield, But The Air Is Getting Thinner

This company released a robust set of financials for the second quarter. It continued to cover its dividend payout with net investment income in Q2 2019. Portfolio quality remained very high. Shares are probably fully valued by now, have an unappealing risk/reward near 52-week highs. I continue to see outsized downside risks for cyclical BDCs including this company.

Ares Capital Corp. (ARCC) released decent second quarter results at the end of July. The business development company once again covered its dividend payout with net investment income and reported an improvement in credit quality in the second quarter. That being said, though, I am cautious about the economic trajectory in the United States now that the Fed is lowering interest rates. Ares Capital Corp.'s shares are probably about fully valued today and have an unattractive risk/reward for new investors.

Source: Seeking Alpha

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