IDU - DNP: It Is Finally Time For This Beaten-Down CEF 8.8% Yield

2024-05-23 12:35:03 ET

Summary

• DNP Select Income Fund is a closed-end fund focused on utilities.
• The fund is composed mostly of utility equities, with a smaller allocation to MLPs, bonds, and cash.
• DNP's premium to NAV (Net Asset Value) is currently low compared to its historical average, presenting a potential buying opportunity.
• The surge in energy needs from AI development will benefit utility companies, leading to a potential NAV increase for DNP.
• Despite recent ROC (Return of Capital) utilization, the fund has a history of stable NAV and is expected to perform well with rising utility stock prices.

Thesis

It has been more than a year since we wrote about the DNP Select Income Fund ( DNP ), an equity closed-end fund focused on utilities. In our last piece, we moved the CEF to a 'Hold' rating from a 'Sell' based on the topping out in rates at the time....

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