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Should You Forget Realty Income and Buy a BDC Instead?
A Motley Fool commentary compares Realty Income’s property-rental business with the lending model of business development companies, using Ares Capital as its example. The author argues that floating-rate loans can increase interest income when rates rise, while stressing that higher borrowing costs can also increase defaults among portfolio companies.
The article cites Ares’s US$29.3 billion investment portfolio spanning 619 companies. It presents BDCs as a possible alternative for investors focused on income, but also notes the constraints that substantial distributions and recurring share issuance can place on long-term compounding. Its preference for Ares is an investment opinion, not a forecast of assured returns.
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