ARCC’s Dividend Has More Support Than ACRE’s 13.7% Yield

Ares Capital’s 9.9% dividend yield looks better supported than Ares Commercial Real Estate’s 13.7% payout, according to a September 22 comparison by the Motley Fool. The key difference is earnings support: both companies share a manager, but their portfolios and recent results diverge.

ARCC lends mainly to U.S. middle-market businesses, while ACRE originates and invests in commercial real estate loans. Ares Capital reported $0.47 in core earnings per share for the second quarter, just under its $0.48 dividend.

That narrow quarterly gap is part of the case for ARCC, not proof the dividend is fully covered every quarter. The company said its regular dividend has been stable or higher for 17 years, and the Motley Fool reported $1.38 per share in excess taxable income carried forward for distribution in 2026.

ARCC also reported $0.15 per share in net realized gains over the last year, according to the Motley Fool. Its second-quarter portfolio included 619 investments, with 59% of fair value in first-lien secured loans, which generally have priority for repayment if a borrower defaults.

ACRE’s latest numbers were weaker against its payout. It reported $0.12 per share in distributable earnings for the second quarter, compared with a $0.15 dividend; over the prior 12 months, earnings totaled $0.43 per share against $0.60 in dividends.

The company says it is reducing office loans and properties it owns after taking over troubled assets. ACRE’s chief financial officer said management expects its plans to rebuild earnings to levels that meet or exceed the dividend, but that recovery has not yet appeared in the reported figures.

Investors should also remember that yield changes with share price, and neither company guarantees its payout. The next test is whether ACRE can raise earnings enough to cover its dividend, while ARCC needs to keep core earnings near or above its regular payment and maintain credit quality.