Ares Capital Yields 9.6%, And Q2 Reinforced Why It's My Favorite BDC

Ares Capital remains my top BDC pick, offering a durable 9.6% yield and industry-leading underwriting through credit normalization. Q2 2026 showcased resilient credit metrics, accelerating deal flow, and enhanced funding flexibility, with $6 billion in liquidity and a new commercial paper program. Dividend coverage is robust: NII, TTM core earnings, and $1.38/share spillover reserve support the $0.48 quarterly payout, with 60 consecutive stable or rising payments. ARCC trades at a 3.4% NAV premium and 10.51x forward earnings, justified by scale, quality, and consistent cash returns nearly double risk-free alternatives.

Ares Capital (ARCC) is the largest publicly traded business development company (BDC) and in my opinion, it's still the gold standard in the BDC realm. The private credit space spent the first half of 2026 answering questions about