Is Ares Capital Stock a Buy Now?

The big draw for investors in Ares Capital (NASDAQ: ARCC) is its huge 9.2% dividend yield. To put that into perspective, the S&P 500 (SNPINDEX: ^GSPC) only offers a yield of about 1.1%, and the average financial stock is at 1.6% or so. But before you run out and buy Ares Capital, you need to understand the risks that come along with that lofty yield.Ares Capital operates in the finance sector. However, as a business development company (BDC), it has a very specific corporate structure and purpose. Like a real estate investment trust (REIT), a BDC can avoid corporate-level taxation if it pays out at least 90% of its taxable income as dividends.The trade-off for investors is that they have to treat the dividend as if it were earned income. Still, the entire purpose of a BDC is to pay dividends. That's the good news.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool