Jan. 7 at 6:40 PM
$ARCC is a BDC (business development company), which is an investment vehicle that lends money to private, middle-market companies.
In exchange, BDCs earn interest income, which is then passed through to investors as dividends. Like REITs, they are required to payout 90% of earnings as dividends.
We track BDCs closely over on the Dividendology Database.
Despite growing skepticism around BDCs as rates fall, ARCC’s Q3 results reinforced why it's still considered one of the higher quality BDCs:
- 20th consecutive quarter of covering the dividend
- Core earnings of
$0.50 vs.
$0.48 dividend
- Record NAV per share of
$20.01
- Low non-accruals (~1% at fair value)
Just as important, ARCC has built significant dividend protection.
The company ended Q3 with
$1.26 per share in spillover income, giving it more than two quarters of dividend coverage even if earnings temporarily compress as rates fall.
At today’s price, ARCC yields 9.5%, as well as trading slightly below its historical average P/TBVPS multiple.
