Ares Capital lends to middle-market businesses, collecting interest and lending fees from its loans. Equity investments can add returns, but the recurring dividend case starts with the lending portfolio. Borrowing costs, management fees, operating expenses and borrowers that stop paying all affect the net investment income left for shareholders.
Business
BDC
Listing
ARCC · XNAS
Reporting period
2026-06-30
Dividend schedule
Quarterly
How the business works
The route from business loans to shareholder income is direct: borrowers pay interest, and Ares pays its financing and operating costs before the remainder can support a dividend. We like that recurring income stream, but loan repayments must be reinvested and credit losses can interrupt it. Follow net investment income alongside the regular payment, then use changes in non-accrual loans and funding costs to understand why coverage moved.
The latest four recorded reporting periods. Each issuer measure keeps its own name and dates. These source records supplement the Fly High figures above; different measures are not added together or assumed comparable.
As of 2026-09-26, annual earnings of $1.91 per share compare with $1.92 in annual dividends. Coverage is 99.5%. Earnings fall short of the payment by $0.01 per share.
Negative
A steady earnings cushion makes the income case more comfortable. A sustained shortfall would concern us.
Is earning power improving?
Lower. Latest two actual quarters total $0.9400 per share; the preceding two total $1.0000. This describes the earnings comparison and does not establish a DRIP action. Latest two completed quarters compared with the preceding quarters.
Negative
We want earnings per share to keep pace with the dividend. The next report helps show whether support is improving or slipping.
Asset quality
Rising non-accruals increase the risk to interest income just as Fly High's comparable Core earnings fall short of the dividend. The unchanged average portfolio grade is a counterweight, not evidence that troubled loans have recovered. Amortized cost measures the exposure that stopped accruing; fair value reflects its current valuation, not assured recovery. Net investment income, Core EPS and GAAP income remain separate, with unrealized marks distinct from realized losses. Reviewed 2026-09-26.
Monitor
These findings can change earnings available to each share and are explained with their issuer sources in the business research.
Funding and liquidity
The July note maturity was repaid in full. June asset coverage remained above the regulatory minimum, and the completed September note sale demonstrates financing access. Cash, unused borrowing capacity and note proceeds are different resources; capacity remains subject to collateral and other restrictions. Monitor the cost of replacing low-coupon debt, the floating-rate swap exposure and deployment of new financing. A planned facility paydown is not assumed complete. Reviewed 2026-09-26.
Monitor
These findings can change earnings available to each share and are explained with their issuer sources in the business research.
The assets behind the earnings
How ARCC makes money
Financial snapshot: 2026-06-30. Research reviewed 2026-09-24. The annual earnings comparison is from 2026-10-03. The business and balance-sheet figures below relate to the reporting period shown.
The assets it owns
$30.498 billion total assetsReported by Ares Capital Corporation
Consolidated balance-sheet assets at 2026-06-30. This is not market capitalisation or the external manager’s assets under management.
Share of consolidated total assets at 2026-06-30; other assets are the arithmetic residual. This is not a loan-seniority or sector allocation.
Annual earnings of $1.91 per share compare with $1.92 in annual dividends. Coverage is 99.48%. Earnings fall short of the payment in this update. We want to see the gap close.
Ares Capital's distribution capacity begins with cash interest and fee income from its investment portfolio. From that income, the company must meet borrowing costs, operating expenses, management and incentive fees, and any credit-related losses. Portfolio repayments can provide liquidity for new investments or debt reduction, while realized gains may supplement net investment income. Because lending income, funding costs, leverage, and credit performance can all change, distribution capacity should be assessed over multiple quarters rather than from one period alone. Net investment income coverage is particularly important for a BDC because it indicates whether the regular distribution is being earned through the core lending portfolio.
This is the business behind the dividend. We care most about the recurring earnings left for shareholders after the costs of running and financing it.
At 2026-06-30, Ares Capital Corporation reported $30.498 billion of total assets and $16.607 billion of total liabilities.
Liabilities represented 54.5% of reported assets. This broad balance-sheet measure includes more than borrowing and must not be read as a debt-to-equity ratio. Funding costs and asset losses can both reduce the earnings available to shareholders.
Q2 NII was $0.50 per share, Core EPS $0.47 and GAAP net income $0.24. The declared third-quarter common dividend is $0.48, payable September 30 to holders of record September 15.
The earnings relate to the second quarter; the payment belongs to the third-quarter declaration. Core EPS is non-GAAP. These figures do not replace the formal four-quarter estimate.
Ares Capital lends to companies that can be affected by slower growth, higher costs, refinancing needs, or weaker demand. Defaults, restructurings, non-accrual investments, and lower recovery values can reduce portfolio income and net asset value.
This exposure matters if it reduces the earnings left to pay the dividend. The next report will show whether that is happening.
Many BDC investments have floating rates, which can support portfolio income when reference rates rise. However, borrowing costs can also increase, and lower rates may eventually reduce asset yields. The net effect depends on portfolio rate floors, debt structure, leverage, and the pace of rate changes.
This exposure matters if it reduces the earnings left to pay the dividend. The next report will show whether that is happening.
On September 15, Ares closed $750 million of unsecured notes due September 15, 2033 at a 6.250% coupon. A same-notional swap receives 6.250% fixed and pays three-month SOFR plus 1.85250%.
The issuer expects net proceeds to repay credit-facility debt. The bond coupon differs from the floating cost after the swap; the financing proceeds are not earnings.
Shareholders authorized below-NAV common-share issuance, subject to board approval and stated limits including a 25% share cap, for twelve months ending August 13, 2027.
This is permission for possible future issuance. The vote does not establish that shares have been sold below NAV.
At June 30, 2026, loans on non-accrual represented 2.4% of investments at amortized cost and 1.4% at fair value, versus 1.8% and 1.2% at December 31, 2025. The weighted average investment grade at fair value remained 3.1.
Fly High assessment: The larger non-accrual share warrants monitoring even though the average grade was unchanged. Loans that stop accruing interest can reduce income and later recoveries may differ from their current fair values.
At June 30, 2026, ARCC reported $383 million of cash and cash equivalents, approximately $6.7 billion of additional borrowing availability subject to facility restrictions, and 186% asset coverage against its 150% statutory minimum.
Fly High assessment: The reported cash, facility capacity and asset-coverage headroom do not identify an immediate funding shortfall. Borrowing availability is conditional and borrowing proceeds are not earnings.
Net asset value per share declined from $19.94 at December 31, 2025 to $19.59 at March 31, 2026 and $19.35 at June 30. No common shares were issued or sold during the first six months of 2026.
Fly High assessment: The two successive declines show erosion in capital per existing share, rather than a decline explained by newly issued shares alone. Watch credit losses and investment marks alongside Core earnings and the dividend.
Start with next-quarter net investment income and the declared dividend. Then check whether non-accrual loans, funding costs or the recent NAV decline are changing what those loans earn for shareholders.
Net asset value
Latest recorded asset value per share$19.3500Share price compared with recorded asset value2.53% discount
Financial data through October 3, 2026.
What to watch next
Fly High earnings cover the included dividend, but reported coverage has weakened. The confirmed July repayment removes a specific maturity question without making new debt an earnings source. Follow recurring income per share, non-accrual recoveries and financing costs. The recorded share price and NAV supply valuation context; a discount cannot establish a future recovery or eliminate credit risk.
Look for the gap between comparable earnings and the included dividend to narrow in the next update.
Check whether the next reported quarter reverses the decline in comparable earnings.
Key dates
Expected earnings report
October 27, 2026
Dividend payment date
September 30, 2026
These dates help you follow the next report and the dividend payment. The expected earnings date can move. The declaration above gives the company’s confirmed dividend dates.
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U.S. federal · Tax year 2025
Dividend tax treatment
Ares Capital reported a mix of nonqualified and qualified dividends for 2025. All distributions were ordinary dividends, including the qualified portion.
Ordinary, nonqualified
70.65%
Qualified dividends
29.35%
Capital-gain distributions
0%
Return of capital
0%
Tax year: 2025. Total distributions: $1.92 per share.
Tax details and source
Total ordinary dividends (includes qualified)
100%
Section 199A portion (within ordinary dividends)
Not confirmed
Exempt-interest distributions
0%
Reporting form
Form 1099-DIV
Source date
2026-01-30
Qualified dividends are included in total ordinary dividends. Section 199A is a separate designation within ordinary dividends, not extra income or qualified dividend income.
Your account type, holding period and circumstances affect treatment. Use your broker’s tax statement for filing. Return of capital generally reduces cost basis; amounts beyond basis can be taxable. IRS dividend guidance.
