Could Buying Ares Capital Stock Today Set You Up for Life?

If you are looking to set yourself up with a lifetime of reliable income, you'll want to tread carefully with Ares Capital (NASDAQ: ARCC). The dividend yield is a huge 9.4%, but the business behind that yield comes with some very important risks to consider. Here's what you need to understand before you buy Ares Capital.Ares Capital is what is known as a business development company (BDC). This is a very specific corporate structure that is intended to pass income on to shareholders in a tax-efficient manner. It's similar to, but slightly different from, real estate investment trusts (REITs). Where REITs invest in rental properties, BDCs make loans to smaller businesses. Both distribute a significant portion of the cash flows they generate as dividends.Image source: Getty Images.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool