I wouldn't touch it. Why?
1. It trades at a premium to NAV
2. Much of the monthly payments are currently Return Of Capital..your money...not their earned money
3. It has negative UNII....bad.
just check it out
Yes am in retirement mode for over a decade. No. do not need the income at this point but have a big hangup--- can't stand losses in my portfolio. I am actually hoping for higher interest rates. A safe 4% investment would suit me.
Lower prices mean more shares on the drip each month, and the opportunity to buy more income for the same money on the dip, since I'm not planning to sell and I am buying, i'm more interested in stable prices that will allow me to buy more income for the same "per dollar" value.
I did as well, what are you going to do if you sell it, go to cash? That's not a good idea, just buy more and drip and let it run. It will not go to zero and income stream will continue. Compared to cd, 100,000 dollars dnp pays as much as 750000 dollars in cds. So it drops some, so would rent houses or whatever else you put your money in. Buy until you reach your goal and keep for income, that's my thinking.
You sound like someone that is either near retirement, or in retirement, like I have been for the last 11 years.
Growth of capital is fine, but I am more interested in growth of dividends and distributions at this stage of the game. I've been living off the market and SS the past 11 years. My market income has increased to a point where it is more than double our expenses. These expenses by the way have increased from every $1 we spent in 2003 we spent $2.29 in 2013. The extra income is invested in additional income securities. If the market corrects prices will go down and the income will increase because you can buy more securities for more income at a lower price.
Disadvantages to this scenario--The value of your portfolio .will drop and you will lose bragging rights at cocktail parties. Taxes are a major growing expense for me If portfolio prices increase, I have to take a larger RMD from my IRA's which continue to boost my annual tax bill
From my standpoint---I'm not interested in selling any securities--SO WHY DO I CARE WHAT PRICE IT'S SELLING AT? I am only interested in the income I derive from those securities.
Crazy as it might sound-Sometimes less is better.
thanks for your info. Am really not a newbie, having been in the bond business decades ago. Each investor has to consider many factors in making their decision on any security holding. Is the market just jittery re: rising interest rates, or, will there be more pain to come and for a longer time? I have a substantial portfolio of preferred issues and I am plenty worried about the performance of that portfolio in a rising interest rate environment.
I started buying DNP on Feb 13 2014 and have dripped all divvies and bought a number of times on dips since then The divvies get discounted down to NAV or 5%. it's interesting- You said you are down about 3% on DNP. I just checked my portfolio and I am up 3% and I will receive another chunk of discounted shares on August 12 or 13 (It takes 1 to 3 business days for the discounted dripped shares to hit my account from DNP. Since they will arrive at the NAV price as of the close of Friday August 8 it will further increase my gain to market value.
My Average cost for DNP is$9.747588 per share and based on today's closing price of $10.05 my current gain is 3.00907%. And all DNP shares are held in IRA's and ROTH's to defer taxes as long as possible.
The history of DNP is a continuous uninterrupted 27 years of regular monthly dividends. Through thick and thin they have paid and paid. and paid. they are good at what they do and that is to pay month after month.
I backtested the figures from what is available and if you bought 100 shares at $10 and nothing more upon the funds inception in March 1987 and you reinvested all the distributions you would have about 1063 shares after the July 2014 payment at about the same $10 for a total of $10,630. Any additional purchases on dips over all those years would have given the buyer many , many more shares than the 1063.
The beauty in my opinion is the quiet growth without excitement and if the price dips you get more shares dripped to you each month and you compound the growth even faster.
A young person today that finds this fund and uses it for a ROTH or IRA needs nothing else. Remember this fund is mostly invested in UTILITIES .
The big problem is THAT PERSON NEEDS PATIENCE. Thats something most people don't have.
Even you said "You are rethinking your investment." What did you think you were buying?
Think it through my friend.
good luck. am losing nearly 3% since my initial buy a few months back. When we get the expected bump in rates the leverage will work against it. why pay a premium of 4% to nav? rethinking my holding.
fsharkey- are you going to replace the DNP with a nice, juicey 10 yr.bond yield of 2%? You probably should for safety, if you've held shares for 10+ yrs. and think there's a 21% ROC...
I'd really like to know how you come up with a 21% ROC. I have had it much longer than 10 years, and I have never seen a year-end figure of 21%.
fsharkey, I am guessing the placement of preferred placement shares had something to do with the decline. So you were probably right about some people having some info the little guys don't. Has recovered nicely since the news broke.
The dripped shares were credited to my accounds at about 5:00PM Friday July 11, 2014. The dripped price was $10.0561 which was the NAV per share as of the close on July 9. Friday's closing share price was $10.26.
Next event is July 29, 2014 when DNP goes X-dividend again when the$0.065 will be paid on August 11 or dripped soon after.
after three days of it, i got out after having the stock 10+ yrs. convinced of insider information and tomorrow's news would turn up the reason why so many shares dumped. i think i will be looking elsewhere for a decent return. I don't like the 21% return of capital, but the premium is in line.
DNP just went X-Div on Thursday June 26. dividend will be paid July 10. DNP also recently announced the next three(3) dividends payable in August, September and October. So more money will be coming on schedule to either spend or drip into additional shares which will help keep up with inflation.
All you need is patience
DNP has been paying solid dividends since 1987. between- 6- 8 % returns. awesome.
Sentiment: Strong Buy
Yes I know all about VWESX being a long term corp bond fund. DNP is invested in Utilitie common & preferred stocks & utilitie bonds. Yes the payout is higher with DNP, & I was looking at total return, not just payout.
They are two very different animals....
But I'd rather have DNP's .065 monthly distribution, as opposed to VWESX's .04. Did you realize that vwesx is 100% long term corporate bonds? That is not dnp strategy.