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The company basically owns a portfolio of mortgages and makes money off the spread between the yield of its investments and the short-term funding costs to buy them. It locks in the spreads with hedges and then uses leverage to increase its returns. It had investments in 191 portfolio companies at the end of Q1.
million in net debt, its net-leverage ratio is a modest 0.31. Furthermore, the company is slated to complete a number of projects in 2024, which should lead to considerably lower capital expenditures next year. Though it closed out 2023 with $277.3 Image source: Getty Images.
dividend yield Hercules Capital (NYSE: HTGC) is a businessdevelopmentcompany (BDC) that specializes in providing capital to venture-backed start-ups. What makes Ares a bit different than Hercules is that the company tends to focus on lower middle-market businesses across a wider array of industries.
Ares Capital is a businessdevelopmentcompany ( BDC ) that provides financing for middle-market companies (businesses that generate between $10 million and $250 million in earnings before interest, taxes, depreciation, and amortization ( EBITDA ) every year). Image source: Getty Images.
One type of business that income-focused investors might have come across is the businessdevelopmentcompany (BDC) , which invests in the debt and equity of middle-market companies. However, BDCs can employ very different strategies and not all are created equal.
That's because Ares is a businessdevelopmentcompany (BDC) that mainly focuses on paying high dividends to income-oriented investors. Let's review its business model, growth rates, and valuations to decide. It usually invests between $30 million and $500 million in debt and equity in each company.
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