NPFD - It Is Time To Swap Out Of NPFD

2025-05-20 06:37:07 ET

Summary

• NPFD offers high, tax-advantaged monthly income and low interest rate risk, but its current discount to NAV is modest at under 4%.
• Distribution coverage is weak at 59%, with a significant portion of payouts as the return of capital, raising sustainability concerns.
• Given better alternatives in the preferred CEF space, I recommend swapping out NPFD for PFO or FLC, especially in tax-advantaged accounts.
• With zero commissions, investors should scale in and out of PFO and FLC using multiple smaller trades to maximize flexibility and liquidity.

The Nuveen Variable Rate Preferred & Income Fund ( NPFD ) is a diversified closed-end fund that invests primarily in preferred securities. The fund objective of NPFD from their website is:

to provide a high level of current income and total return by investing in primarily investment grade, variable rate preferred securities and other variable rate income-producing securities from high quality, highly regulated companies such as banks, utilities and insurance companies."

For further details see: