Why I'd Still Buy This 10%-Yielding Dividend Stock After the Fed's Latest Hike
Interest rates are both a headwind and a tailwind for Ares Capital.
Overview
The Federal Reserve just hiked rates for the first time since 2023 as it tries to tamp down persistently high inflation. Inflation is currently running above 3%, higher than the Fed's 2% target. That has most Fed watchers expecting further rate hikes.
Higher rates are a headwind for high-yield dividend stocks. At over 10%, Ares Capital (NASDAQ:ARCC) is certainly in that category, given that the S&P 500's dividend yield is closer to 1%. Despite that, I'd still buy Ares Capital right now.
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Originally published at www.fool.com.
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