Investors holding high-yield business development companies (BDCs) like Ares Capital and Main Street Capital in taxable accounts face significant tax costs, as their distributions are taxed as ordinary income. For example, a $500,000 split equally between these two stocks can result in about $10,880 paid in federal taxes annually at the 24% bracket. Holding these stocks in a Roth IRA eliminates this tax drag, allowing the full income to stay invested and potentially grow tax-free. Over 10 to 20 years, this tax advantage can compound to savings of over $100,000 to $300,000, making Roth IRAs a smart choice for these income-generating stocks.
Ares Capital Corporation (ARCC) offers a high dividend yield of 10.34% and has a market cap of $13.33 billion, while Main Street Capital Corporation (MAIN) yields 5.91% with a market cap of $5.03 billion. Both stocks show strong buying interest on Pluang, with ARCC at 86% buy orders and MAIN at 65% as of Oct 14, 2026, 20:03 WIB. ARCC trades at $18.47 and MAIN at $53.41, with slight declines of 0.48% and 0.67% respectively on the day. These figures highlight the appeal of these income-focused stocks for Roth IRA strategies discussed in the article.
