Company: DNP
Filing Date: 2025-06-20
Form Type: N-CSRS
Source: 0001193125-25-143433
Chunk: 2

Company: DNP SELECT INCOME FUND INC
Filing Date: 2025-06-20
Form: N-CSRS
Chunk 2
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5 calendar year. The most defensive utilities in the U.S. saw double-digit returns, given investors’ concerns around an economic slowdown caused by a potential trade war. European utilities outpaced their U.S. counterparts on market strength in Europe and attractive valuations. Midstream energy continued its robust performance, with natural gas-focused stocks once again leading the sector. Natural gas generation provides back-up for intermittent, renewable energy generation, and the gas pipelines are the key suppliers. Companies tied to crude oil came under some pressure as the backdrop for the commodity looks challenging given concerns around an economic slowdown and OPEC production increases. Finally, communications also produced a positive total return but trailed the other two sectors. The wireless towers and integrated telecommunications carriers exhibited their defensive characteristics during the volatile period, while lower interest rates also helped support performance across the sector. The towers are beginning to see a pickup in leasing demand from wireless carriers which should be beneficial in the second half of the year and in 2026. Implications of Trade Tariffs for The Fund: News flow and market action has been dominated by tariff discussions since the April 2, 2025, tariff announcement by President Trump. The debate mainly centers around the impact tariffs will have on economic growth and inflation. However, what about the potential impact on the sectors in which the Fund invests? Generally, it is less than what many others economic sectors may experience. While it is still early days and there is much uncertainty around tariffs, here is our initial take at what we could expect in coming months and how it may impact the sectors in which the Fund invests. Starting with utilities, the companies do not expect to see a significant increase in costs for their capital plans as a majority of the spending is domestically sourced. If higher capital costs are incurred, these costs should be recovered in rates over time and not affect earnings. A greater cost increase will likely be felt by international utilities which are developing renewables in the U.S., although we have not seen estimates for this yet. The direct impact of tariffs on the midstream energy sector is relatively low. The energy sector in Canada and Mexico was exempted from initial tariff threats, helping to alleviate any significant, near-term impacts to flows of oil and natural gas across North America. However, the back and forth with China on tariffs has impacted U.S. energy exports to the country. There is a liquid, global market for LNG and propane, meaning U.S. cargoes have simply been redirected elsewhere. China recently exempted ethane imports from tariffs, which has helped ease