BDC Comparison
ARCC vs HTGC: Which Is the Better Pick in 2026?
A head-to-head comparison of Ares Capital Corporation and Hercules Capital, Inc. covering yield, cost, risk, and income potential.
Data updated August 19, 2026
Best for
- ARCCInvestors who want private-credit income through a business development company.
- HTGCInvestors who want higher current income (11.37% vs 9.78% for ARCC).
Visual comparison
Key metrics
Projected income on $10K
Projections assume the current yield and share price remain constant. Actual results will vary.
Total returns
ARCC has lagged HTGC over the trailing twelve months, posting a -2.63% total return against -1.08%. The lead holds up over 10 years too: HTGC has compounded at 13.58% a year, against 12.51% for ARCC. ARCC has been the steadier holding, though — annualized volatility of 17.8% against 23.0% for HTGC. Figures are total returns: price change plus every distribution reinvested.
| Symbol | YTD | 1Y | 3Y | 5Y | 10Y | Since Jun 2005 | Volatility | Sharpe | Sortino | Max drawdown |
|---|---|---|---|---|---|---|---|---|---|---|
| ARCC | 2.06% | -2.63% | 10.83% | 9.74% | 12.51% | 11.78% | 17.8% | 0.33 | 0.46 | -19.3% |
| HTGC | -2.41% | -1.08% | 12.35% | 12.04% | 13.58% | 12.18% | 23.0% | 0.31 | 0.41 | -27.4% |
Total return with all distributions reinvested on the ex-dividend date, split-adjusted, as of August 19, 2026. YTD and 1Y are cumulative; longer windows are annualized. “Since Jun 2005” measures every fund from June 9, 2005 — the youngest fund's first trading day — so all funds share one comparison window. Volatility is the annualized standard deviation of daily total returns over the trailing 3 years. Sharpe and Sortino divide the annualized return in excess of the risk-free rate by, respectively, that volatility and the downside deviation (both over the trailing 3 years) — higher is better. Max drawdown is the largest peak-to-trough total-return decline over the same window — shallower is better.
Side-by-side snapshot
| Metric | ARCC | HTGC |
|---|---|---|
| Full name | Ares Capital Corporation | Hercules Capital, Inc. |
| Issuer | Ares Management | Hercules Capital |
| Last Close | $19.67 as of August 19, 2026 | $16.65 as of August 19, 2026 |
| Distribution yield | 9.78% | 11.37% |
| Distribution Safety Score™ | 94 | 86 |
| Expense ratio | — | — |
| AUM | — | — |
| Distribution frequency | Quarterly | Quarterly |
| Underlying index | — | — |
| Objective | — | — |
| Asset class | Equity | Equity |
| Inception date | N/A | N/A |
| Beta | 0.62 | 0.739 |
| Last dividend | $0.4800 | $0.4000 |
| Ex-dividend date | 09/15/2026 | 08/11/2026 |
Bottom lineChoose ARCC if you want private-credit income through a business development company. Choose HTGC if you want higher current income (11.37% vs 9.78% for ARCC).
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Quick verdict
ARCC (Ares Capital Corporation) and HTGC (Hercules Capital, Inc.) are both quarterly-pay dividend-paying business development companies (BDCs), but they take different approaches.
HTGC offers the higher yield at 11.37% vs 9.78% for ARCC. A higher yield means more current income per dollar invested, though it may come with different risk characteristics.
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Deep dive
Yield & income
On a $10,000 investment, ARCC would generate roughly $81.50/month, while HTGC would produce $94.75/month, at current distribution rates. Both pay quarterly distributions.
Strategy & risk
ARCC is a business development company built around BDC exposure, while HTGC is a business development company built around BDC exposure. Beta is 0.62 for ARCC and 0.739 for HTGC, making ARCC the less volatile of the two by this measure.
Security details
ARCC (Ares Capital Corporation) is a business development company. HTGC (Hercules Capital, Inc.) is a business development company.
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Frequently asked questions
What is the current distribution yield for ARCC and HTGC?
ARCC currently distributes 9.78% and HTGC 11.37%, based on fund data updated August 2026. Distribution yield moves with both the payout and the share price, so check the as-of date before relying on either figure.
Is ARCC or HTGC better for dividend income?
It depends on your goals. HTGC currently offers the higher distribution yield, which means more income per dollar invested. However, a lower-yield fund may offer better total return or lower volatility. Consider your time horizon and risk tolerance.
What is the difference between ARCC and HTGC?
ARCC (Ares Capital Corporation) is a business development company built around BDC exposure, while HTGC (Hercules Capital, Inc.) is a business development company built around BDC exposure. They are issued by Ares Management and Hercules Capital respectively.
Can I hold both ARCC and HTGC?
Yes — nothing prevents holding both. Whether the combination actually diversifies depends on how much the underlying exposures overlap, which isn't fully measurable from the data on this page; review each security's holdings, sector, and strategy before treating them as complementary.
Is ARCC or HTGC safer?
By Dividend Vision's Distribution Safety Score — a rules-based 0–100 estimate of how resilient a distribution looks, where higher is safer — ARCC scores 94, HTGC scores 86, so ARCC's payout currently looks the more resilient of the two. No score makes an investment risk-free — treat this as a screening signal, not a guarantee.
How much income does $10,000 in ARCC vs HTGC generate?
At current rates, $10,000 in ARCC would generate roughly $81.50 per month ($978.00 annually). The same in HTGC would produce about $94.75 per month ($1,137.00 annually).
Which has performed better historically, ARCC or HTGC?
ARCC has lagged HTGC over the trailing twelve months, posting a -2.63% total return against -1.08%. The lead holds up over 10 years too: HTGC has compounded at 13.58% a year, against 12.51% for ARCC. ARCC has been the steadier holding, though — annualized volatility of 17.8% against 23.0% for HTGC. Figures are total returns: price change plus every distribution reinvested. Past performance does not guarantee future results.
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ARCC vs HTGC — at a glance
Generated August 16, 2026.
Figures quoted in this analysis are from its generation date and may lag the live snapshot table above, which always shows the latest data.
Overview
ARCC and HTGC are both business development companies that lend to middle-market private businesses. ARCC, managed by Ares Management, is the larger and more diversified operator with a broader lending mandate across sectors and deal sizes. HTGC, run by Hercules Capital, focuses on venture debt and growth-stage companies, a narrower lending niche that historically commands higher yields but carries different credit risk.
How they differ
The biggest difference is lending strategy: ARCC pursues a wider portfolio of middle-market leveraged buyouts, debt financings, and structured credit across sectors, while HTGC concentrates in venture debt to private equity-backed and venture-capital-backed companies. That focus gap shows in yield—HTGC distributes 11.33% versus ARCC's 9.66%—reflecting the higher spread environment in venture lending and likely higher credit risk. HTGC also trades at a lower price ($16.70 vs. $19.87) and carries a slightly higher beta (0.739 vs. 0.62), signaling greater sensitivity to market stress and a less established credit base.
Who each is best for
ARCC: Fits investors seeking a more established, diversified BDC with lower volatility and moderate yield, willing to accept a single-digit distribution rate in exchange for portfolio stability and sector breadth.
HTGC: Fits investors comfortable with venture lending's credit concentration and higher market sensitivity in exchange for a double-digit yield, particularly those with longer time horizons who can weather venture-backed credit cycles.
Key risks to know
- Venture lending credit concentration (HTGC). Venture-debt portfolios are concentrated in early-to-growth-stage companies with limited operating history; a downturn in private equity or venture funding can sharply increase delinquencies and losses, particularly if recession reduces refinancing availability for borrowers.
- NAV erosion at sustained double-digit yields (HTGC). An 11.33% distribution on a BDC typically implies returns heavily weighted toward current yield rather than capital appreciation; if HTGC's underlying portfolio underperforms, NAV will erode and distributions may depend partly on returning capital rather than earnings.
- Leverage and funding risk. Both BDCs use debt to amplify returns; rising interest rates increase their cost of funds, which can compress spreads and pressure earnings. HTGC's venture-focused portfolio may face steeper repricing if credit conditions tighten.
- BDC regulatory and capital constraints. BDCs must distribute at least 90% of taxable income, limiting retained earnings and forcing reliance on leverage or asset sales to grow the portfolio. Changes in BDC regulation or tax treatment could alter the economics of both vehicles.
Bottom line
ARCC trades a lower yield for a more diversified, lower-volatility lending book; HTGC offers a higher distribution rate at the cost of venture-lending concentration and greater market sensitivity. The choice hinges on whether the additional 167 basis points of yield justify HTGC's higher credit and business-cycle risk.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
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