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.
Updated October 2, 2026
How these figures are calculated: methodology.
Best for
- ARCCInvestors who want private-credit income through a business development company.
- HTGCInvestors who want higher current income (10.81% vs 10.18% 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
100% reinvested · ex-date convention. Period returns use this fixed assumption, independent of chart settings. YTD and 1Y are cumulative period returns; 3Y, 5Y, and 10Y are annualized. The shared Since-start window is annualized only when it covers at least one year.
ARCC has outpaced HTGC over the trailing twelve months, posting a 3.54% total return against 0.61%. The picture flips over 10 years, though — HTGC has compounded at 13.60% a year, ahead of ARCC at 12.09%. ARCC has been the steadier holding, though — annualized volatility of 17.7% against 22.9% for HTGC. Figures are total returns: price change plus every distribution reinvested.
| Symbol | YTD cumulative | 1Y cumulative | 3Y annualized | 5Y annualized | 10Y annualized | Since Jun 2005 | Volatility | Sharpe | Sortino | Max drawdown |
|---|---|---|---|---|---|---|---|---|---|---|
| ARCC | -0.37% | 3.54% | 9.25% | 8.06% | 12.09% | 11.58% | 17.7% | 0.25 | 0.34 | -19.3% |
| HTGC | -3.33% | 0.61% | 13.05% | 12.28% | 13.60% | 12.06% | 22.9% | 0.34 | 0.45 | -27.4% |
Total return with all distributions reinvested on the ex-dividend date (a modeling convention, not the cash-settlement date), split-adjusted, as of October 2, 2026. YTD and 1Y are cumulative period returns; 3Y, 5Y, and 10Y are annualized. The shared Since-start window is annualized only when it covers at least one year. “Since Jun 2005” measures every fund from June 9, 2005 — the start of shared available history — 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 | $18.86 as of October 2, 2026 | $16.74 as of October 2, 2026 |
| Distribution rate | 10.18% | 10.81% |
| Trailing 12-month yield | 10.18% | 10.81% |
| Distribution Safety Score™ | 94 | 85 |
| Safety-Adjusted Yield | 9.57% | 9.19% |
| Expense ratio | — | — |
| AUM | — | — |
| Distribution frequency | Quarterly | Quarterly |
| Underlying index | — | — |
| Objective | — | — |
| Asset class | Equity | Equity |
| Inception date | N/A | N/A |
| Beta | 0.627 | 0.747 |
| Last dividend | $0.48 | $0.40 |
| 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 (10.81% vs 10.18% 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 10.81% vs 10.18% 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 $254.50 cash per distribution, while HTGC would produce $270.25 cash per distribution, 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 0.627 for ARCC and 0.747 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 rate for ARCC and HTGC?
ARCC currently distributes 10.18% and HTGC 10.81%, based on fund data updated October 2026. Distribution rate 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 85, 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 $254.50 cash per distribution ($1,018.00 annually). The same in HTGC would produce about $270.25 cash per distribution ($1,081.00 annually).
Which has performed better historically, ARCC or HTGC?
ARCC has outpaced HTGC over the trailing twelve months, posting a 3.54% total return against 0.61%. The picture flips over 10 years, though — HTGC has compounded at 13.60% a year, ahead of ARCC at 12.09%. ARCC has been the steadier holding, though — annualized volatility of 17.7% against 22.9% 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 October 4, 2026.
Overview
ARCC and HTGC are both business development companies that lend to middle-market private businesses, typically in the $10 million to $250 million revenue range. They fund themselves through equity issuance and debt, then distribute most of their net investment income as quarterly dividends. The chief distinction is portfolio composition: ARCC focuses on larger, more established sponsors and portfolio companies, while HTGC tilts toward smaller, earlier-stage businesses and non-control positions, creating different risk and yield profiles.
How they differ
ARCC's 10.18% distribution rate trails HTGC's 10.81%, a gap that reflects HTGC's smaller average deal size and higher credit risk in its portfolio. ARCC has a lower beta of 0.627 versus HTGC's 0.747, signaling that ARCC's larger-company lending may cushion downturns better than HTGC's smaller-business exposure. Both distribute quarterly, but HTGC's modestly higher yield comes at the cost of tighter deal underwriting and less diversified borrower bases—typical for smaller BDCs competing for assets in a crowded market.
Who each is best for
ARCC: Fits investors seeking a lower-volatility BDC with exposure to larger, more seasoned middle-market sponsors and borrowers. Appeals to those comfortable with a 10.18% payout and willing to trade modest income for relative stability.
HTGC: Designed for income-focused investors with higher risk tolerance and a longer time horizon. Attracts those who prioritize 10.81% yield and can withstand the underwriting and concentration risks of smaller-company lending.
Key risks to know
- Credit deterioration in smaller portfolios. HTGC's smaller average loan size and earlier-stage borrower profile mean fewer covenant cushions and faster covenant breach-to-default cycles than ARCC's larger deals, increasing loss severity in a credit downswing.
- NAV erosion at elevated distribution yields. Both BDCs distribute north of 10%; if portfolio returns fall below payout rates—a risk in rising interest rates or a recession—NAV will compress. HTGC's higher yield makes it more vulnerable to this math breaking down.
- Interest-rate sensitivity. BDCs borrow at floating rates and lend at floating rates, but there's a lag; rising rates squeeze net spread margins until portfolio repricing catches up, potentially pressuring distributions.
- Equity dilution from capital raises. Both BDCs fund growth through secondary offerings. Frequent issuance dilutes per-share NAV unless returns on deployed capital exceed the cost of equity, a risk in slower lending environments.
Bottom line
If you prioritize stability and lower volatility in a BDC structure, ARCC's 0.627 beta and larger-borrower focus stand out; if you need maximum current yield and can stomach higher credit and concentration risk, HTGC's 10.81% payout reflects a riskier but higher-income strategy. Past performance does not guarantee future distributions or NAV stability.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
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The metrics behind this comparison, explained in the Academy.
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These comparisons follow the Dividend Vision methodology.