NCZ-A: A 6.7% Yielding A-Rated Addition To Our Portfolio

2025-02-12 17:53:57 ET

Summary

• The equity market is overvalued, presenting an opportunity to switch to higher credit quality investments like Virtus Convertible & Income Fund II, 5.50% Series A Cumul Preferred Shares (NCZ-A).
• NCZ-A offers a 5.5% cumulative annual dividend, trading at $20.59 with a current yield of 6.70%, and is eligible for preferential tax rates.
• Virtus Convertible & Income Fund focuses on convertible securities and high-yield bonds, with a strong dividend yield of 11.24% and a consistent trading discount.
• NCZ-A's A-credit rating and undervaluation compared to peers make it an attractive, relatively low-risk addition to long-duration portfolios.

Co-authored by Relative Value .

Overview

As we showed in our recent PCQ article, the equity market is overvalued. The equity earnings yield and treasury yield are currently effectively inverted. ...

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