Nikada
The Nuveen Preferred & Income Opportunities Fund (NYSE:JPC) is a CEF which seeks to provide investors with a high current level of income by investing in preferred securities and other high yield securities.
I view the preferred securities market sector as one that investors should have exposure to given current high levels of yield, reasonably strong credit quality, and potential tax benefits compared to bonds.
JPC currently offers an ~8.6% market distribution rate and 7.4% NAV distribution rate. This distribution rate may seem highly attractive given the fairly high credit quality of the fund’s holdings (~80% of holdings are rated BBB or better), but I believe it is less attractive when considering the amount of leverage (currently 38%.)
BBB corporate bonds, which can be proxied by the iShares BBB Rated Corporate Bond ETF (LQDB), tend to offer significantly less yield. LQDB holdings are characterized by an average yield…
