Three Low-Cost Closed-End Funds with 12%+ Dividend Yields Amid Market Rebound

The article discusses three cheap closed-end funds (CEFs) that pay 12%+ dividends. These funds trade at discounts to their portfolio values, which are expected to recover, providing a double-digit payout and potential gains. The funds are Nuveen Floating Rate Income Fund (JFR) with a 12.5% yield, and two other funds with similar characteristics. The discounts on these funds are expected to narrow, making them attractive investment opportunities.

Investors seeking high-yield opportunities are finding a rare "delayed reaction" income play in closed-end funds (CEFs) that offer 12%+ dividends at attractive discounts. This opportunity stems from the April stock-market plunge, which created a window of opportunity that remains available today.

The three highlighted CEFs—Nuveen Floating Rate Income Fund (JFR), Nuveen Multi-Asset Income Fund (NMAI), and abrdn Total Dynamic Dividend Fund (AOD)—trade at discounts to their portfolio values, known as net asset value (NAV). These discounts, which have not fully recovered from the April market turmoil, present a compelling investment case.

Nuveen Floating Rate Income Fund (JFR)

JFR offers a 12.5% yield and currently trades at a 6.7% discount to NAV. The fund invests in below-investment-grade floating-rate loans and other floating-rate securities, providing a high level of current income. JFR's management, Nuveen, is known for its extensive credit expertise and loan market presence, which may help maximize risk-adjusted returns.

Nuveen Multi-Asset Income Fund (NMAI)

NMAI, another Nuveen CEF, offers a 13.6% yield and a 9% discount to NAV. The fund mixes investments in well-known stocks like Microsoft (MSFT), JPMorgan Chase & Co. (JPM), and Apple (AAPL) with loans and bonds, resulting in a well-diversified portfolio. The fund's discount has been shrinking, indicating growing investor interest.

abrdn Total Dynamic Dividend Fund (AOD)

AOD provides a 12.8% dividend yield and trades at a 9.7% discount to NAV. This pure-stock fund invests in large-cap holdings such as Microsoft, Apple, Alphabet (GOOGL), and Tencent Holdings (TNCT). Despite the fund's oversold status, it remains an attractive investment due to its high yield and large-cap holdings.

Investors should act quickly, as the discounts on these funds are expected to narrow, potentially reducing their attractiveness. Moreover, many CEFs pay dividends monthly, providing a steady income stream.

References:

[1] https://contrarianoutlook.com/3-cheap-12-dividends-the-rebound-left-behind/
[2] https://www.nuveen.com/en-us/mutual-funds/nuveen-floating-rate-income-fund