Why Is Ares Capital's Dividend So High?
What's the old saying? If something sounds too good to be true, it probably is?
That's why a bunch of investors might be wary of taking on a position in Ares Capital (NASDAQ: ARCC), particularly right now. The business development company's current dividend yield of 10.3% seems unrealistically high compared to the S&P 500's (SNPINDEX: ^GSPC) yield of 1.7%, even if interest rates are soaring.
Well, the sky-high dividend yield is legitimate, meaning the company has been making real dividend payments at that rate. As you might suspect, however, there's something of a catch involved here.
Source Fool.com