Time Is Running Out to Lock In This Financial Stock's Sky-High Yield
Written by Matt DiLallo for The Motley Fool -> Investors need to buy Ares Capital shares about two weeks before its upcoming dividend payment. The BDC's yield is currently high due to a decline in its stock price over the past year, which has recently started to reverse. Ares
Investors need to buy Ares Capital shares about two weeks before its upcoming dividend payment.
The BDC's yield is currently high due to a decline in its stock price over the past year, which has recently started to reverse.
Ares Capital (NASDAQ: ARCC) currently pays a $0.48-per-share quarterly dividend. At its recent stock price of around $19, the business development company (BDC) yields more than 10%. That's about 10 times the S&P 500 's yield, which currently sits around 1%.
Investors are running out of time to lock in the financial stock 's currently sky-high yield. Here's why you might want to act fast.
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Ares Capital announced its second-quarter dividend payment at the end of April when it reported its first-quarter financial results . The BDC will pay that dividend on June 30th. However, an investor would need to be a shareholder before the market closes on June 15. An investor who buys after that date wouldn't receive their first dividend until the third-quarter payment, which Ares has historically paid on the last day of September.
Waiting to buy also risks locking in a lower yield. The REIT's share price has fallen about 8% this year, pushing its yield to around its highest level in the last five years:
However, the share price has already bounced off its recent bottom, and could continue rallying, which would steadily lower the yield. While shares have fallen over the past year due to concerns about the private credit market and falling interest rates, Ares is in a strong position to navigate both headwinds.
