Plus. Buying Stocks On discount!
Let’s get the disclaimer out of the way now, then get into this new exciting dividend stock.
I want to remind you again that I am not a broker and am not offering stock recommendations. I also do not run a stock or stock options strategy company. I’m simply a retiree like you who has gained knowledge that has been helpful to me, and I’d like to share those experiences with you. My articles are for educational purposes only.
Continuing my quest to mine for high-yielding dividend stocks or ETFs, I came across another stock that is a BDC paying a fantastic 10% dividend. The name of the stock is Ares Capital Corporation (ARCC)
In a previous article I wrote about HTGC, which is another BDC that I personally have owned in my portfolio for years and it has been a reliable investment for me.
I explained in a previous article that BDC stands for Business Development Company. A BDC is basically a company that lends money to small and midsized businesses that often can’t get all their financing from traditional banks. Think of it as a publicly traded private-credit lender.
Hey, I wonder if they fund seniors looking to pay their bills!🤣 Just kidding!
Yahoo Finance describes ARCC as a business development company specializing in growth capital, acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.
It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in sports, media & entertainment, industrials & business services, infrastructure & power, financial institution groups, software & technology, specialty healthcare, consumer, retail & services, energy, consumer products, health care products, and information technology service sectors.
ARCC is the largest publicly traded BDC. Its Net Asset Value (NAV) as of the last quarter (June 2026) is $19.35 a share. The NAV is essentially what a BDC’s assets are worth minus what it owes, divided by the number of shares it is trading. As of Friday, September 25, 2026, the stock was trading at $19.20. So that is close to its NAV which is basically a good thing. ARCC is currently trading slightly below its NAV, which means investors are paying a little less than the reported value of the company’s net assets.
ARCC has total assets of approximately $30.5 billion. Its debts come to $15.8 billion, so it has net assets of approximately $13.9 billion. The company’s earnings or profits in the last quarter were $0.50 per share. That covers the dividend of $0.48, and its earnings have been covering the dividend for several years. As of the last quarter, its cash on hand was $383 million.
ARCC was established in 2004. Its beginning dividends were $0.29. Although it has varied at times, the dividends have basically continued to rise until they hit their current $0.48. They have been paying $0.48 since March of 2023. In my opinion, that’s a plus. The company pays this dividend on a quarterly basis. So, it is $0.48 a quarter times four quarters which equals $1.92 a share annually.
ARCC strengths are:
- Exceptional size and diversification
- Long dividend record
- Strong access to capital
- Excellent long-term track record
ARCC weaknesses are:
- Dividend coverage could be stronger
- NAV fell a little in the first part of 2026
- Interest -rate sensitivity.
ARCC’s current credit rating is BBB which is considered investment grade. The best credit rating is AAA. Yahoo Finance has 14 analysts following the stock. 4 rate the stock a strong buy, 7 rate it a buy and 3 rate it a hold. Overall, Yahoo Finance currently shows a generally favorable consensus among analysts following the stock.
I personally like the stock and would rate it a B+. I don’t have room in my portfolio at this time, but when I do, I will consider adding it.
Buy a stock at a discount and get paid to do it! 😮
In previous articles I told you about how to sell what is called a Put option to buy a stock at a discounted price. Today I’m going to show you a sample of how exactly that can be achieved.
Before I get into that, I will stress again that I am not advocating that anyone becomes an options day trader. Of course, for those of you who do day trade options or are interested in it, I’ll be happy to discuss it with you anytime.
But for now, this article is for educational purposes only. Previously I have explained how an average investor can take advantage of two option strategies to bring extra income. One option strategy is the Covered Call which I wrote about a few articles ago and the other is the selling of a Put option to buy a stock you want at a discounted price. That’s what I am discussing today.
When done properly, both strategies pose less risk of the many option strategies available. Some might say that the selling of a Naked Put, as it is sometimes referred to, is dangerous. And it can be if you enter the trade without a specific intent in mind. The intent that I am talking about is to buy XYZ stock at a discounted price. You like the stock and you want to buy it, and you have the funds to do so. Why not buy it for less?
Let’s get into it. The Put option is geared towards a stock going down. In other words, the value of the Put option goes up when the stock goes down as discussed in my previous article. But that is not relevant for this discussion because our purpose is to buy the stock for a lower price.
So today I am talking about selling a Put option to open. What does this mean? If you sell a Put option to open, it means you enter into a contract to buy a stock if it drops to a certain price by a certain date. The price you agree to buy the stock is called the strike price. The date the Put option contract ends is called the expiration date.
Phew, that’s a lot to think about! 🫤 But I think you get it so let’s move on.
Because you have agreed to buy the underlying stock at a certain price, you get paid a premium to enter into the contract. Thus, this is called selling a Put to open. The contract remains open until the owner of the Put exercises their right to sell the stock to you (meaning you buy it).
Let me remind you that all the mechanics for the buying, selling, etc. of an option is handled by your broker. You don’t have to concern yourself with that.
A second possibility is that it expires without being exercised, in which case you simply keep the $250 with no further obligation. And a third option is to close the Put yourself by buying it back at whatever the going price is at the time. Why would you close the Put out? You may have changed your mind and decided not to buy the stock after all. It’s as simple as that.
Let’s set up a specific example. Here is the scenario. You’ve been watching and studying Verizon (VZ). You want to buy it. It is July 24, 2026. VZ is trading for $43.82. You check out the options and see that you can sell a Put with a 40-strike price and with an expiration date of September 18, 2026. That is almost $4 a share less than it would cost to buy the stock on July 24th.
So, you sell the 40-strike Put and you receive $0.50 a share for selling it. So, if the stock is assigned to you, you would effectively be buying the stock for $39.50. (Purchase price $40 – $0.50 credit =$39.50)
You would like to own 500 shares of VZ. That means you receive a premium of $250 which is credited to your account that day. ($0.50 X 500 shares = $250) See the option table below and check out the row highlighted in blue.
See the Bid and Ask prices. The Bid is the highest price buyers are currently willing to pay for the option. The Ask is the lowest price sellers are currently willing to accept. The Bid and Ask price can change quickly so trying to sell the option someplace in the middle generally works. That’s why I felt comfortable saying you were able to sell the option for $0.50.
So, what happened with trade during the period between July 24, 2026, and September 18, 2026? The stock took off, hitting a high of $51.56 before settling back to $48.09. That means the owner of the Put would not have exercised their right to Put the stock to you at $40. Think about it. If the stock is selling for $48.09, they would lose $8 by selling it at that time. So that’s not going to happen!
Yikes, you would have been better off just buying the stock. 😬 But today on September 28, 2026, as I write this, the stock has dropped further and is now trading for $46.48.
So, you didn’t get the stock at the discounted price of $40, and you did not participate in the run up of the stock, but you did get $250 and guess what. You can do it all over again and make another $250 or so. And maybe this time you’ll wind up with VZ.
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I’d also love to hear your questions, suggestions, or comments. And of course, I’d love to hear about the stocks or ETFs you have been successful with! You can leave them at the bottom of this page in “Comments” or email me at ponzot2004@yahoo.com.
Until next time,
Tony
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