If You Invest $2,000 in Ares Capital Today, Here's the Dividend Income You Could See by 2030
Key Points
Ares Capital has delivered a stable-to-growing dividend for more than 16 years.
It has maintained its current rate since 2022.
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Ares Capital (NASDAQ: ARCC) currently yields nearly 10.2%. That's almost 10 times higher than the S&P 500 (over 1%). As a result, you can collect a lot of income from the business development company.
Here's a look at how much dividend income you could see by 2030 if you invested $2,000 into the BDC stock today.
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A big-time income stream
Ares Capital currently trades at around $19 a share. At that price, you could purchase about 105 shares for $2,000. The BDC paid its most recent quarterly dividend of $0.48 per share on June 30th. If it maintains its current rate and historic dividend payment schedule, investors who buy today will receive two dividend payments this year (Sept. 30 and Dec. 30), collecting a total of $100.80 in dividend income.
The BDC has paid a stable-to-growing dividend for more than 16 years. It has maintained its current quarterly rate of $0.48 per share since the end of 2022. To be conservative, we'll assume that Ares Capital continues to pay its current dividend rate. While the company's core earnings of $0.47 per share fell short of its dividend during the first quarter, it also recorded $0.15 per share of net realized gains, which, when combined with its core earnings, was well in excess of the dividend. Further, the company entered this year with ample spillover income from last year ($1.38 per share). These numbers suggest the current dividend level remains sustainable, though near-term growth seems unlikely.
Here's how much dividend income you could collect if we assume a stable payment through the end of the decade (and no dividend reinvestment):
|
Annual |
Cumulative |
|
|---|---|---|
|
2026 |
$100.80 |
$100.80 |
|
2027 |
$201.60 |
$302.40 |
|
2028 |
$201.60 |
$504.00 |
|
2029 |
$201.60 |
$705.60 |
Author's calculations.
That's a nice stream of dividend income. It's a lot more than you'd collect from a lower-yielding investment. While there's a higher risk that Ares Capital could cut its dividend, the company has an excellent dividend record and plenty of near-term cushion.
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Matt DiLallo has positions in Ares Capital. The Motley Fool has positions in and recommends Ares Capital. The Motley Fool has a disclosure policy.
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