No doubt -- DNP has performed exceptionally well -- it's up 62% ytd. Including dividends, the 1 year return is 73%. Do you think that gets repeated? If we were back to 12/29/08, with DNP trading at a 7.4% discout to NAV, I think I would be positive on it. But we're not there -- we are here: shares are above $9. NAV is a $7.37. They are 40% leveraged. If the stock were at a discount to NAV, and the underlying assets were deeply depressed in value, then that leverage would be a very nice thing, but the reverse is true -- the stock is at a significant premium to NAV, and the underlying assets, utility stocks, I think will get slammed as LT interest rates rise.
The dividends and payout are just another problem. Net interest income is only 60% of the payout. NII is inflated by artifically low ST interest rates. When the Fed raises ST rates, NII will fall, as the borrowing costs on $1b will rise. It's simple math. How long will they be able to pay out nearly twice what they earn? Forever into the future? I don't think it will work that way, do you?
Just ask: why is it generally impossible to short DNP right now -- no shares available for borrow?