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The press release announces the distribution sources and amounts for February 2024, with a distribution per share of $0.065. The distribution includes net investment income, long-term capital gains, and return of capital. The fiscal YTD distributions sum up to $0.260 per share. The Fund’s 5-year average total return on NAV is 5.34%, with a current distribution rate of 9.81% of NAV.
The disclosure of distribution amounts and sources for an investment fund is a critical piece of information for investors, as it directly impacts their income from investments. In this case, the distribution is predominantly from net realized long-term capital gains, accounting for 80% of the current distribution and 47% of the cumulative distributions. This suggests the fund is successfully realizing profits from investments held longer than a year, which is generally taxed at a lower rate than short-term gains, potentially offering tax advantages to investors.
However, the annualized current distribution rate of 9.81% as a percentage of net asset value (NAV) is notably high and could raise sustainability concerns. If the distribution rate exceeds the fund’s total return over time, it may erode the fund’s principal, potentially impacting long-term capital growth. Investors should monitor the fund’s ability to maintain such distributions without compromising its asset base.
From a taxation perspective, the composition of the distributions is essential. The absence of return of capital in the current distribution is notable, as return of capital is typically not taxable but reduces an investor’s cost basis in the investment. This can have implications for future capital gains taxes. The fact that the reported figures are based on U.S. GAAP and may differ from federal income tax regulations is an important distinction, as investors need to be aware that tax reporting figures may vary and should prepare for potential discrepancies when filing taxes.
Looking at the performance metrics, the average annual total return on NAV over 5 years of 5.34% juxtaposed with a cumulative total return on NAV for the fiscal YTD of 8.23% indicates that the fund may be experiencing a period of above-average performance. This could attract new investors looking for funds with strong recent returns. Nevertheless, it’s crucial to consider whether the current performance is aligned with the fund’s historical risk profile and investment strategy. A significant deviation could indicate a change in management approach or market conditions, which may affect future performance.
CHICAGO–(BUSINESS WIRE)– Notification of Sources of Distribution
|
Distribution Period |
February 2024 |
|
|
Distribution Amount Per Share of Common Stock |
$0.065 |
|
The following table sets forth the estimated amounts of the current distribution, payable March 11, 2024 to shareholders of record February 29, 2024, together with the cumulative distributions paid this fiscal year-to-date (YTD) from the following sources. The fiscal year is November 1, 2023 to October 31, 2024. All amounts are expressed per share of common stock based on U.S. generally accepted accounting principles, which may differ from federal income tax regulations.
|
Distribution Estimates |
February 2024 |
Fiscal YTD |
||
|
Sources |
Per Share Amount |
% of Current Distribution |
Per Share Amount |
% of Cumulative Distributions |
|
Net Investment Income |
$ 0.013 |
20% |
$ 0.062 |
24% |
|
Net Realized Short-Term Capital Gains |
– |
– |
– |
– |
|
Net Realized Long-Term Capital Gains |
0.052 |
80% |
0.122 |
47% |
|
Return of Capital (or Other Capital Source) |
– |
– |
0.076 |
29% |
|
Total (per common share) |
$ 0.065 |
100% |
$ 0.260 |
100% |
|
|
||||
|
November 30, 2023 |
|
|||
|
Average annual total return* on NAV for the 5 years |
|
|
5.34% |
|
|
Annualized current distribution rate as a percentage of NAV |
|
|
9.81% |
|
|
Cumulative total return on NAV for the fiscal YTD |
|
|
8.23% |
|
|
Cumulative fiscal YTD distributions as a percentage of NAV |
|
|
0.82% |
|
The Fund will issue a separate 19(a) notice at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution plan.
The Fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of the fiscal year and may be subject to changes based on tax regulations. The Fund or your broker will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the past five annual returns.
DNP Select Income Fund Inc. (NYSE: DNP) is a closed-end diversified investment management company. The Fund’s primary investment objectives are current income and long-term growth of income. The Fund seeks to achieve these objectives by investing primarily in a diversified portfolio of equity and fixed income securities of companies in the public utilities industry. For more information, visit the Fund’s website at www.dpimc.com/dnp or call the Fund at (800) 864-0629.
Source: DNP Select Income Fund Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240308962291/en/
Dianna P. Wengler or Donny C. Overton
Phone: (833) 604-3163
Source: DNP Select Income Fund Inc.
The distribution amount per share for February 2024 for DNP is $0.065.
The sources of distribution for DNP’s February 2024 distribution include net investment income, long-term capital gains, and return of capital.
The fiscal YTD distribution amount per share for DNP is $0.260.
The average total return on NAV for DNP over the past 5 years is 5.34%.
The current distribution rate as a percentage of NAV for DNP is 9.81%.
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About DNP
duff & phelps investment management co. is a chicago based sec registered investment advisor that was founded in 1932 as an investment research firm. duff & phelps has over 30 years of experience managing investment portfolios for institutional separate accounts and both open- and closed-end funds. our funds have received 20 lipper awards for top performance in peer comparisons. duff & phelps’ product lines include global utilities, global infrastructure, global real estate, investment grade fixed income and large cap equities. duff & phelps is a wholly-owned subsidiary of publicly traded virtus investment partners (nasdaq:vrts, http://www.virtus.com).
