Beware, JPC Is Not Earning Its Income

2025-02-14 15:31:02 ET

Summary

• The Nuveen Preferred & Income Opportunities Fund has shown strong historical returns, but currently faces risks due to its NAV discount evaporating.
• JPC's high yield is attractive, but the fund is not earning its dividend, relying on return-of-capital, which is unsustainable long term.
• The fund's diverse holdings and leverage strategy offer potential benefits, but there are still significant risks present.
• Given the current valuation and income concerns, I recommend holding JPC and exercising caution before adding to or initiating a position.

Introduction

The Nuveen Preferred & Income Opportunities Fund (NYSE: JPC ) is a closed-end fund that invests in exactly what its namesake says, preferred shares and opportunistic credit. The fund is over twenty years old and has returned well for shareholders over that time, with a total return of over 200%, and an annualized 5.46%.

The last year was a great year for JPC, with a near-24% total return, and very positive price movements, up nearly 12%....

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