As of June 9, 2025, Flaherty & Crumrine Dynamic Preferred and Income Fund Inc's estimated intrinsic value ranges from $0.37 to $35.19 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $34.50 | +69.8% |
| Discounted Cash Flow (5Y) | $29.63 | +45.8% |
| Dividend Discount Model (Multi-Stage) | $25.50 | +25.5% |
| Dividend Discount Model (Stable) | $35.19 | +73.2% |
| Earnings Power Value | $0.37 | -98.2% |
Is Flaherty & Crumrine Dynamic Preferred and Income Fund Inc (DFP) undervalued or overvalued?
With the current market price at $20.32, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Flaherty & Crumrine Dynamic Preferred and Income Fund Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.01 | 1.34 |
| Cost of equity | 8.5% | 12.4% |
| Cost of debt | 4.0% | 9.1% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.66 | 0.66 |
| After-tax WACC | 6.3% | 10.1% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $30 | $885M | 68.8% |
| 10-Year Growth | $34 | $985M | 49.5% |
| 5-Year EBITDA | $83 | $1,972M | 86.0% |
| 10-Year EBITDA | $77 | $1,855M | 73.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $22M |
| Discount Rate (WACC) | 10.1% - 6.3% |
| Enterprise Value | $218M - $349M |
| Net Debt | $276M |
| Equity Value | $(58)M - $73M |
| Outstanding Shares | 21M |
| Fair Value | $(3) - $4 |
| Selected Fair Value | $0.37 |
| Metric | Value |
|---|---|
| Market Capitalization | $417M |
| Enterprise Value | $693M |
| Trailing P/E | 5.09 |
| Forward P/E | 6.61 |
| Trailing EV/EBITDA | 26.50 |
| Current Dividend Yield | 646.90% |
| Dividend Growth Rate (5Y) | -5.92% |
| Debt-to-Equity Ratio | 0.66 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $10.35 |
| Discounted Cash Flow (5Y) | 25% | $7.41 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.10 |
| Dividend Discount Model (Stable) | 15% | $5.28 |
| Earnings Power Value | 10% | $0.04 |
| Weighted Average | 100% | $28.17 |
Based on our comprehensive valuation analysis, Flaherty & Crumrine Dynamic Preferred and Income Fund Inc's weighted average intrinsic value is $28.17, which is approximately 38.6% above the current market price of $20.32.
Key investment considerations:
Given these factors, we believe Flaherty & Crumrine Dynamic Preferred and Income Fund Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.