The Private Credit Boom Faces a Real Test. What It Means for Ares Capital.

The most attractive feature of Ares Capital (NASDAQ: ARCC) today is probably its huge 10.5% dividend yield. However, investors need to fully understand what supports that lofty yield before buying this stock. And recognize that the dividend has been cut before. Here's why the test the private credit markets are facing is so important for Ares Capital right now.Ares Capital issues shares to the public, and those shares will continue to exist until it repurchases them. In this way, the business development company (BDC) has permanent capital. The stock price may rise and fall, but nobody can force Ares Capital to return their cash. That's an important dynamic as you watch non-public private credit funds limit redemptions. Image source: Getty Images.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool