Ares Capital stock offers strong returns and dividends

Ares Capital, the largest business development company, has seen its stock rise 45% since its IPO in 2004, delivering a total return of 1,090% with reinvested dividends. A $10,000 investment then would now be worth about $119,000. The company provides loans to middle-market firms, often overlooked by traditional banks. Ares has expanded its portfolio through acquisitions, now valued at $26.8 billion, and focuses on secured loans, which reduces risk in case of client bankruptcies. While Ares Capital's stock may not turn a $10,000 investment into $1 million, it remains a strong dividend stock with an 8.8% yield. Analysts expect stable performance, with core earnings projected to dip slightly in 2025 but still cover dividends.