PFF - HPF: Very Good Fixed-Income Fund But Could Be Overpriced
2024-04-05 03:21:25 ET
Summary
- The John Hancock Preferred Income Fund II offers a 9.00% yield, making it an attractive option for income-focused investors.
- The fund's recent performance has been strong, outperforming both investment-grade and junk bonds.
- However, there are concerns about the current state of the preferred stock market and the fund's premium valuation, which may warrant caution for investors.
- The fund managed to cover its distribution during the first half of the 2024 fiscal year, but it was only able to do so because of unrealized gains.
- The fund is probably not a buy right now due to possible overpricing of preferred stocks and its share price premium.
The John Hancock Preferred Income Fund II ( HPF ) is a closed-end fund that income-focused investors can employ as a method of achieving their goals. The fund does very well at this task, as it currently boasts a 9.00% yield. As I pointed out in a recent article , the John Hancock preferred stock funds tend to have some of the highest yields available in the space, and all three of them have generally delivered reasonable consistency with respect to their distributions over time. We can see here that the fund's yield compares reasonably well to that of its peers:
| Fund Name |
| Morningstar Classification |
| Current Yield |
| John Hancock Preferred Income Fund II |
| Fixed Income-Taxable Preferreds |
| 9.00% |
| Cohen & Steers Select Preferred & Income Fund ( PSF ) |
| Fixed Income-Taxable Preferreds |
| 7.58% |
| First Trust Intermediate Duration Preferred & Income Fund ( FPF ) |
| Fixed Income-Taxable Preferreds |
| 9.32% |
| Flaherty & Crumrine Preferred Securities Fund ( FFC ) |
| Fixed Income-Taxable Preferreds |
| 6.86% |
| Nuveen Preferred & Income Opportunities Fund ( JPC ) |
| Fixed Income-Taxable Preferreds |
| 7.96% |
| John Hancock Preferred Income Fund III ( HPS ) |
| Fixed Income-Taxable Preferreds |
| 8.57% |