One serves up high-yield comfort, the other injects tech-fuelled growth. Together, they’re the investment world’s odd couple—and that’s precisely the point.
Let’s be honest: the debate between value and growth investing has dragged on longer than most royal scandals. But instead of picking a side, I find it far more interesting—and profitable—to embrace the balance. Consider this a tale of two tickers: one a dividend juggernaut quietly printing cash, the other a medical marvel redefining disease management with a flick of technological brilliance. Meet Ares Capital Corporation (ARCC) and DexCom Inc. (DXCM)—proof that opposites don’t just attract, they compound.
Income meets innovation—two forces, one powerful portfolio strategy
Ares Capital: Where Boring Becomes Beautiful
There’s something wonderfully reassuring about $Ares Capital(ARCC)$. It doesn’t promise moonshots or market-beating innovation. What it offers, quite simply, is income. Thick, steady, inflation-crushing income. At a time when investors are chasing AI dreams and meme stocks with the desperation of a pub-goer chasing last orders, ARCC is quietly paying out over 9% in dividend yield and still managing to post market-thrashing returns over five years.
Now here’s where it gets interesting. Ares isn’t just a glorified bank in a suit. It's a business development company specialising in lending to mid-sized firms—companies that often get ignored by traditional banks but still have plenty of cash flow to offer. These firms fall in the $10–250 million EBITDA range, a lending niche banks have increasingly abandoned due to decades of consolidation and post-2008 regulation. Ares stepped into the void, targeting a $5.4 trillion addressable market and investing over $160 billion since inception.
With over $2.99 billion in annual revenue and a net margin exceeding 62%, ARCC squeezes profitability out of every deal like a financial sommelier pressing grapes. Its portfolio is spread across 550 companies, with its largest single investment accounting for just 2%—a level of diversification that helps insulate it from shocks.
And while the stock may look sleepy, the numbers say otherwise. Return on equity sits at a healthy 14.67%, and its P/E ratio of 8.13 makes it look like a screaming bargain in today’s overpriced market. Better yet, it’s not just surviving uncertain times—it’s thriving because of them. When banks retreat, Ares advances. During periods of tighter credit, it steps in, lending to businesses desperate for capital—often at higher rates and better terms. It's capitalism with a smirk.
Yes, there’s leverage—Ares’ debt-to-equity ratio is just under 1.0, comfortably below the BDC average of 1.05. This is by design. BDCs borrow cheaply, lend wisely, and pocket the spread. So long as economic Armageddon doesn’t rear its head, the risk is calculated, not reckless. Most importantly, 64% of its loans are first- or second-lien senior secured, meaning it gets paid before others if things go south.
DexCom: From Medical Device to Market Dominator
And then there’s $DexCom(DXCM)$—a company that makes monitoring blood sugar levels look not just futuristic, but fashionable. If ARCC is the investment equivalent of a strong cup of builder’s tea, DexCom is a biotech energy shot.
DexCom’s claim to fame is its continuous glucose monitoring (CGM) systems, devices that stick to your skin and quietly report blood sugar levels in real time. They’ve already transformed the lives of Type 1 diabetics, but the big secret—the real catalyst—lies in Type 2 diabetes, a vastly larger and largely untapped market.
Recent advances mean DexCom’s devices no longer require fingerstick calibration, removing one of the last barriers to mass adoption. It’s not hyperbole to say this could unlock a potential user base of over 30 million in the US alone. Third-party payers are increasingly covering CGMs, with DexCom’s CEO noting that reimbursement has 'significantly expanded' in the past two years.
Financially, DexCom isn’t shy either. With a gross margin of nearly 63% and return on equity soaring past 27%, the company is flexing its pricing power and capital efficiency in tandem. And despite hefty R&D investments, it still churns out over $552 million in free cash flow, proving it’s more than just a techy science project with a cool gadget.
Tariffs and international expansion may pressure margins in the short term—DexCom’s manufacturing is increasingly global with new facilities in Ireland and Malaysia—but its strong U.S. base (28% of 2024 revenue) and planned capacity ramp make it well-equipped to absorb volatility. Meanwhile, global CGM adoption is still under 1%, offering an enormous runway for growth.
Where dividend dependability meets high-tech ambition—in perfect balance
It is, of course, priced accordingly. A forward P/E of 33.44 doesn’t exactly scream 'discount,' but that’s the cost of buying into a company that’s not only expanding its user base, but also actively reshaping how a global disease is managed.
Two Stocks, Two Stories, One Strategy
Let’s get one thing straight—these two companies don’t compete. They complement. Ares gives you high-yield stability and a chance to weather economic bumps while collecting plump dividends. DexCom, on the other hand, injects growth into your portfolio with the enthusiasm of a caffeinated endocrinologist.
What makes this pairing particularly compelling is how they behave in different economic environments. If rates rise or the economy slows, Ares may benefit as lending spreads widen. If technology and healthcare continue their march forward—as they almost always do—DexCom is poised to capture more of a ballooning global market.
Timing matters, of course. ARCC’s recent YTD dip of 7.29% might worry some, but for income investors, that’s practically a 'discount sticker.' DexCom’s share price, after cooling off from prior highs, is more approachable, yet it remains a long-term story—one driven by innovation, global expansion, and potentially even acquisition activity given its $2.58 billion cash cushion.
Dividend vs growth: different journeys, same destination—long-term success
Final Thoughts: Harmony in Contrasts
I don’t believe in choosing between income and growth. I believe in owning both—and these two tickers let me do just that. $Ares Capital(ARCC)$ keeps the lights on with its reliable payouts. $DexCom(DXCM)$ fuels the dream of turning tomorrow’s tech into today’s standard of care. It's the financial equivalent of balancing a sensible savings account with a thrilling side hustle.
Because in the end, investing isn’t just about numbers. It’s about narratives. And this one? It’s a duet worth listening to.
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