Nuveen Variable Rate Preferred & Income Fund (NPFD)

Rose's Income Garden portfolio allocates 25% to finance, with a focus on high-yield preferred shares and closed-end funds. DFP and NPFD are highlighted as attractive CEFs, both trading at discounts to NAV and offering rising or stable monthly distributions above 6%. Six preferred shares, including AGNCN, DLNG.PR.A, NLY.PR.F, RITM.PR.D/E, and SEAL.PR.B, are recommended for their high yields and careful attention to call dates.

Nuveen Variable Rate Preferred & Income Fund offers a high 10.12% yield, outperforming peer indices and most comparable funds over the past three years. NPFD's distribution may be at risk, as variable-rate securities deliver falling income as short-term rates decrease. Shares currently trade at a modest 2.02% discount to NAV, but this is less attractive than the fund's historical average and some peers.

Rose's Income Garden (RIG) portfolio features 81 investments, with 11 monthly payers across BDCs, ETFs, and CEFs focused on income generation. CSWC and PFLT are highlighted BDCs, offering high yields; CSWC is a strong buy on dips, while PFLT is a speculative buy, despite recent pressure. RIG includes three crypto-related ETFs (BITO, ETHU, SSK), providing exposure to digital assets with variable payouts, and two bond-focused ETFs (JBBB, SHYG) as cash alternatives.

NPFD offers a high 10.5% yield and monthly payouts, making it attractive for income investors in a high interest rate environment. The fund's variable rate strategy and focus on investment grade financials provide resilience, but concentration and leverage increase risk. NPFD trades at a 4.2% discount to NAV, but its short history and inconsistent income generation raise concerns about dividend sustainability.

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.

The Nuveen Variable Rate Preferred & Income Fund offers a high 10.75% yield, outperforming major domestic fixed-income indices, but carries higher risk due to leverage. Despite a 6.19% share price increase since May 2024, the fund's net asset value declined by 0.85%, indicating potential overvaluation. The fund's most recent holdings report suggests that its exposure to variable-rate securities is lower than one would expect.

Nuveen Variable Rate Preferred & Income Fund is now like a 'Buy' as the discount has widened back out. NPFD should benefit from lower borrowing costs as the Fed cuts its target rates, improving net investment income and distribution coverage. The fund sports an enticing double-digit distribution, though long-term distribution sustainability remains uncertain and is an area to watch.

NPFD is a closed-end fund offering exposure to preferred and income securities, with a recent distribution increase sparking the discount to narrow. Distribution coverage is weak, but seeing the discount narrow substantially was the main positive from that move anyway, which was likely driven by Saba's involvement. Distribution coverage could also improve in a lower-rate environment, which is an added catalyst moving forward.

The Nuveen Variable Preferred & Income Fund is a preferred stock fund that claims to invest in securities with dividend payments based on interest rates. Despite the yield curve being inverted, the NPFD closed-end fund's current yield of 8.27% is not as high as most variable-rate debt funds. The fund's performance since its inception has been disappointing, with a decline of 30.64%, and it has underperformed most of its peers.

Nuveen Variable Rate Preferred & Income Fund has announced another sizeable distribution boost following a previous raise in December 2023. Saba Capital Management has initiated a position in NPFD and filed a preliminary proxy for the election of a new independent trustee. NPFD's discount has narrowed, but it is still at an attractive level to consider investing in the preferred fund with the potential catalyst of rate cuts for a brighter future.

Different funds within the same sector often have different tilts, which can impact their performance in different market scenarios. The Nuveen Variable Rate Preferred & Income Fund has a unique coupon profile, with a low allocation to fixed-rate preferreds and a relatively large allocation to fixed-to-floating preferreds. We discuss the various market scenarios which would benefit the NPFD CEF.

We review CEF market valuation and performance through the second week of February and highlight recent market action. CEF price action was mixed, with higher-quality fixed-income sectors and interest-rate sensitive equity sectors seeing lower NAVs due to back-up in Treasury yields. CEF fees are full of pitfalls; however, getting a clear picture of fees can allow investors go generate alpha in CEF allocation.

NEW YORK--(BUSINESS WIRE)--Several Nuveen closed-end funds have declared distributions. These funds represent investment strategies for investors seeking diversified sources of cash flow to prepare for and sustain their retirement income needs. For further information regarding fund distributions, including earnings, undistributed net investment income, and notices, please visit www.nuveen.com/cef. The Nuveen Variable Rate Preferred & Income Fund (NYSE: NPFD) has announced a distribution ra.

NEW YORK--(BUSINESS WIRE)--Nuveen Closed-End Funds today announced that the Board of Trustees of the Funds has approved the regular monthly and quarterly distributions. In addition, the Board of Trustees has approved updated distribution polices described below under “Monthly & Quarterly Distributions” for The Nuveen Preferred & Income Opportunities Fund (NYSE: JPC), Nuveen Preferred and Income Term Fund (NYSE: JPI), Nuveen Variable Rate Preferred & Income Fund (NYSE: NPFD), Nuveen.

In 2021, a dozen closed-end funds, or CEFs, were launched, but none of them performed well, with all of them experiencing negative total returns since inception. The CEFs trade at wide discounts to NAV, with an average discount of -12.5%, and offer high yield income with annual yields as high as 12.9%. The hybrid funds with global allocations and higher yielding taxable fixed income funds have performed better than municipal fixed income funds and equity funds.

Nuveen Variable Rate Preferred & Income Fund focuses on 'fixed-to-fixed' and 'fixed-to-floating' preferred securities, not primarily on true variable rate preferred securities as marketed. In the short-run, the NPFD fund has duration risk, counter to what investors may be expecting with a 'variable rate' fund. Investors seeking variable rate preferred exposure may want to consider the Invesco Variable Rate Preferred ETF (VRP).