Nuveen Select Maturities Municipal Fund Holds Steady with $0.0275 Dividend Amid Market Volatility

The Nuveen Select Maturities Municipal Fund (NYSE: NIM) has reaffirmed its commitment to predictable tax-free income with its May 2025 dividend of $0.0275 per share, a figure that aligns with its consistent distribution policy despite broader market turbulence. The announcement, made on May 1, 2025, underscores the fund’s focus on stability for income-focused investors.

Dividend Details and Fundamentals

The May dividend, payable on May 1, 2025, adheres to NIM’s monthly distribution schedule. Investors must hold shares by the ex-dividend date of April 15, 2025, to qualify. While the distribution amount remains unchanged from previous months, it contrasts with recent actions by other Nuveen funds, such as NAD and NEA, which saw increases of up to 45% in June . This suggests NIM’s management prioritizes sustainability over aggressive growth, a strategy aligned with its conservative mandate.

The fund’s structure emphasizes investment-grade municipal securities, with 80% of assets allocated to bonds rated BBB or higher. Its portfolio includes holdings in states like California, Texas, and Ohio, with a focus on intermediate-term maturities. Leverage is minimal at 0.41%, reducing exposure to interest rate fluctuations compared to more leveraged peers.

Performance and Value Proposition

NIM’s net asset value (NAV) stood at $9.99 as of February 26, 2025, while its share price traded at $9.20—a 7.87% discount to NAV. This discount has persisted historically, averaging -9.92% over the past year, offering potential upside for investors if the discount narrows.

The fund’s annualized distribution rate of 3.30% (based on NAV) and 3.59% (based on share price) positions it competitively among tax-exempt income vehicles. However, its NAV YTD return turned negative by May 3, 2025, dipping to -0.88%, reflecting broader municipal bond market volatility. This contrasts with its 3.53% share price return for the same period, highlighting the disconnect between price performance and underlying asset value.

Risk Considerations

While NIM’s conservative strategy mitigates some risks, investors should note:
1. Interest Rate Sensitivity: The fund’s focus on intermediate-term bonds makes it vulnerable to rising rates. A 4.42% average coupon on its holdings offers some insulation, but prolonged rate hikes could compress yields.
2. Leverage Constraints: Though minimal, the 0.41% leverage amplifies volatility slightly.
3. Tax Character: Distributions may include return of capital or capital gains. Investors must review Section 19(a) notices for precise breakdowns, as the May dividend announcement did not specify these details.

Competitive Positioning

NIM’s expense ratio of 0.58% (including management fees and other costs) is competitive, especially against actively managed peers. Its 97.54% allocation to investment-grade securities and 23% turnover rate signal a long-term, value-driven approach. The fund also benefits from Nuveen’s expertise in municipal markets, a key advantage in navigating credit risks and tax regulations.

Conclusion

The Nuveen Select Maturities Municipal Fund remains a solid choice for investors seeking stable, tax-free income, particularly given its 3.59% yield based on current prices and disciplined risk management. While its NAV discount poses both a challenge and an opportunity, the fund’s conservative allocation and low leverage provide a buffer against market swings.

Key data points reinforce this outlook:
- The $0.0275 monthly dividend equates to an annualized $0.33 per share, a figure sustained since its June 2024 adjustment.
- Over 97% of assets in investment-grade bonds limit credit risk.
- A 52-week average NAV discount of -9.92% suggests potential for price appreciation if investor sentiment improves.

For income-focused portfolios, NIM’s blend of safety and yield makes it a compelling option—provided investors remain mindful of interest rate dynamics and the persistent discount to NAV. As the municipal bond market stabilizes, this fund is positioned to reward patience with consistent distributions and gradual value realization.