Nuveen Missouri Quality Municipal Income Fund Holds Steady with $0.0675 Monthly Dividend Amid Market Volatility
8min read The Nuveen Missouri Quality Municipal Income Fund (ticker: NOM) has maintained its consistent dividend strategy in 2025, recently declaring a monthly payout of $0.0675 per share, unchanged since at least December 2024. This stability underscores the fund’s commitment to tax-exempt income generation for Missouri residents, even as broader market conditions test its performance. Below, we dissect the dividend mechanics, recent performance trends, and key risks investors should consider.
Dividend Consistency Amid Rising Rates
The $0.0675 monthly dividend translates to an annualized yield of 7.57% based on the fund’s net asset value (NAV), though its forward yield—calculated using the latest share price of $11.65—is slightly lower at 6.86%. This consistency is notable given the Federal Reserve’s prolonged rate-hike cycle, which often pressures municipal bond yields.
The fund’s payout ratio of 86% indicates that most of its earnings are distributed to investors, a common trait among income-focused closed-end funds. However, this high payout ratio raises questions about the sustainability of distributions if earnings decline.
Performance: NAV Declines, Premium Remains
Despite the steady dividends, NOM’s Year-to-Date (YTD) total return (price basis) through May 2025 has fallen by 8.66%, underperforming the Bloomberg Municipal Bond Index (^BBMBTR), which declined only 0.83% over the same period. The fund’s shares currently trade at a 1.14% premium to NAV, suggesting investor confidence in its long-term income profile despite short-term volatility.
The fund’s struggles reflect broader challenges in the municipal bond market, including rising interest rates and credit concerns. Its portfolio, 99.88% allocated to bonds, is heavily weighted toward Missouri-issued securities, which are exempt from federal, state, and local taxes for in-state residents. This tax advantage remains a key selling point, but the fund’s 4.60% expense ratio—among the highest in its peer group—adds pressure on returns.
Risks: Leverage and Credit Quality
NOM employs leverage to amplify returns, a strategy that magnifies both gains and losses. While this can boost income in stable markets, it exposes the fund to heightened volatility. The fund’s use of inverse floating rate securities complicates its expense calculations, as interest costs are not included in the stated expense ratio but are reflected in its net investment income.
Investors should also note the fund’s credit allocation: while over 80% of holdings are rated investment-grade (AAA to BBB), up to 20% may be in below-investment-grade bonds. This raises credit risk, particularly in an economic slowdown.
A Fund for Missouri Tax Residents, with Caveats
The Nuveen Missouri Quality Municipal Income Fund remains a solid option for Missouri residents seeking tax-free income, thanks to its consistent payouts and targeted state exposure. Its $0.0675 monthly dividend provides predictable cash flow, and the fund’s historical yield of 7.57% outperforms many taxable bond alternatives.
However, the high expense ratio (4.60%) and leveraged structure make it riskier for broader market conditions. Investors should monitor the fund’s NAV discount/premium trends and the trajectory of interest rates, as rising rates could further compress bond prices.
Conclusion: Steady Income, But Not Without Cost
The Nuveen Missouri Quality Municipal Income Fund (NOM) delivers on its promise of tax-exempt income for Missouri residents, with a $0.0675 monthly dividend backed by a 6.86% forward yield. Yet, its 8.66% YTD price decline and 4.60% expense ratio highlight trade-offs between income and risk.
For Missouri-based investors seeking to minimize tax drag, NOM’s tax advantages and consistent distributions justify its premium pricing. However, those outside the state—or wary of leverage-driven volatility—may prefer lower-cost alternatives. As the Federal Reserve’s rate path remains uncertain, NOM’s performance will hinge on its ability to balance income generation with portfolio resilience.
In short: a hold for Missouri tax residents, but proceed with caution for others.
Data as of May 2025. Past performance does not guarantee future results.
