Invesco Senior Income Trust Offers Attractive 12% Yield Amid Market Volatility

Invesco Senior Income Trust (NYSE:VVR) is a closed-end income fund offering a 12% yield. Despite market pessimism around President Trump's tariff wars, the stock price hasn't fully recovered. However, the fund's attractive yield and defensive nature make it a potential investment opportunity for income seekers.

Invesco Senior Income Trust (NYSE: VVR) has declared a monthly dividend of $0.038 per share, maintaining its previous dividend rate [1]. This dividend, payable on June 30, is part of the fund's strategy to offer an attractive 12.1% forward yield, making it a potential investment opportunity for income seekers. Despite market pessimism around President Trump's tariff wars, the stock price of VVR has not fully recovered, with the stock currently trading under $4 [2].

VVR is a closed-end income fund that focuses on senior secured floating rate loans, providing capital preservation potential. The fund's portfolio is primarily composed of first lien loans, with 89% of the assets in borrowers with below-investment-grade credit or no ratings [2]. This focus on senior loans has historically resulted in lower volatility and higher recovery rates compared to unsecured high-yield bonds and equity [2].

The fund's dividend history is mixed, with earlier periods of decline followed by more assured performance. The fund did not cut its dividend during the COVID-19 pandemic and even began to increase it before the Fed began raising interest rates [2]. This increase is largely due to the fund's floating-rate loans, which have allowed it to yield at its high of 12% for longer [2].

However, the fund's future outlook is less promising. The pace of dividend cuts is currently slower than expected, with one cut anticipated in 2025 instead of two [2]. While the floating-rate loans should continue to yield 12% for longer, the yield is not expected to decline as quickly as it grew, and the fund's price is not significantly discounted [2].

Investors should be cautious when considering VVR. While the fund offers an attractive yield, it does not appear to be significantly undervalued. The fund's high expense ratio of 2.37% also adds friction to its performance [2]. For these reasons, VVR is rated as a "Hold" by some analysts, making it a potential investment for those seeking income but not necessarily a bargain [2].

References:
[1] https://seekingalpha.com/news/4454455-invesco-senior-income-trust-declares-0_038-dividend
[2] https://seekingalpha.com/article/4792114-vvr-yields-higher-for-longer-but-not-forever