Ares Capital Is Great. Here's Why You Shouldn't Buy the Stock.
If you are an income investor then you have probably seen Ares Capital (NASDAQ: ARCC) pop up on a stock screen or two. Its huge 9.8% dividend yield would probably be as attractive to a dividend investor as candy is to most children. That's normal.
But it's probably best that you try to understand what this company does before you just step aboard with your investing dollars.
Ares is what is known as a business development company, or BDC. Basically, that means that it makes loans to other companies. This business model involves being something of a specialty lender, stepping into a space in which banks would have historically operated. That's actually a fairly important distinction.
Source Fool.com
