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Ares Dynamic Credit Allocation Fund, Inc. (ARDC)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$82.90 - $221.32$127.02
Multi-Stage$60.12 - $65.50$62.76
Blended Fair Value$94.89
Current Price$14.22
Upside567.29%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR202420232022202120202019201820172016
DPS45.24%0.00%1.371.331.171.151.180.211.271.221.290.00
YoY Growth--2.53%13.39%2.14%-2.50%458.14%-83.30%3.62%-5.56%0.00%0.00%
Dividend Yield--9.04%9.69%10.14%7.04%8.25%1.38%8.46%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)81.98
(-) Cash Dividends Paid (M)63.20
(=) Cash Retained (M)18.78
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)16.4010.256.15
Cash Retained (M)18.7818.7818.78
(-) Cash Required (M)-16.40-10.25-6.15
(=) Excess Retained (M)2.388.5312.63
(/) Shares Outstanding (M)23.3123.3123.31
(=) Excess Retained per Share0.100.370.54
LTM Dividend per Share2.712.712.71
(+) Excess Retained per Share0.100.370.54
(=) Adjusted Dividend2.813.083.25
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$82.90$127.02$221.32
Upside / Downside483.02%793.22%1,456.38%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)81.9887.3092.9899.02105.46112.31115.68
Payout Ratio77.10%79.68%82.26%84.84%87.42%90.00%92.50%
Projected Dividends (M)63.2069.5676.4884.0192.19101.08107.01

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)63.1763.7764.37
Year 2 PV (M)63.0864.2865.49
Year 3 PV (M)62.9264.7366.57
Year 4 PV (M)62.7165.1267.60
Year 5 PV (M)62.4465.4668.59
PV of Terminal Value (M)1,087.171,139.681,194.20
Equity Value (M)1,401.501,463.041,526.82
Shares Outstanding (M)23.3123.3123.31
Fair Value$60.12$62.76$65.50
Upside / Downside322.79%341.36%360.60%

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