Virtus Newfleet ABS/MBS ETF Boosts Monthly Dividend Amid Yield Opportunities

The Virtus Newfleet ABS/MBS ETF (NYSE: VABS) has announced its April 2025 distribution of $0.1043 per share, marking a continuation of its strategy to deliver consistent income to investors. This distribution, payable on April 29, 2025, reflects a >3% annualized increase from its prior dividend rate, underscoring the fund’s focus on capitalizing on opportunities in the asset-backed and mortgage-backed securities (ABS/MBS) markets.

Key Distribution Details

The ex-dividend date for this distribution is set for April 17, 2025, with the record date falling on April 18, 2025. Shareholders who own the ETF before the close of trading on April 17 will be eligible for the dividend. This timing aligns with the fund’s historical pattern of setting the record date one business day after the ex-dividend date, as seen in prior distributions such as the January 2025 payout.

A Rising Dividend Rate

The April 2025 dividend represents a significant step up from the fund’s previous rate. As noted in the fund’s September 2024 announcement, the annualized dividend was increased from $1.07 to $1.19, a move that positions VABS to deliver an estimated $1.12 in dividends over the next 12 months. At its most recent NAV of $24.26/share (as of February 12, 2025), this equates to a 4.63% annualized yield, making it an attractive option for income-focused investors.

NAV and Market Dynamics

While the fund’s NAV has remained relatively stable, it dipped slightly to $24.26 on February 12, 2025, down $0.04 from the prior day. The closing price on that date was $24.28, reflecting a $0.02 discount to NAV—a common occurrence in ETF trading due to supply-demand imbalances. Investors should monitor this discount closely, as it may present opportunities for price convergence over time.

The fund’s net expense ratio of 0.39% also stands out, offering cost efficiency compared to its gross expense ratio of 0.49%. This suggests effective management of operational costs, a positive sign for long-term holders.

Historical Performance and Risk Considerations

VABS has maintained a consistent monthly dividend schedule since its inception, with the highest single distribution of $0.1646/share paid in December 2024. However, investors should note that ABS/MBS investments carry risks tied to interest rate fluctuations and prepayment risks. The fund’s 52-week high of $24.46 (reached in September 2024) highlights its resilience in volatile markets.

Conclusion: A Balanced Income Play

The Virtus Newfleet ABS/MBS ETF’s $0.1043 April distribution underscores its role as a reliable income generator, especially with its 4.63% projected annual yield. While the fund’s NAV has shown minor volatility, its low expense ratio and disciplined dividend strategy provide a solid foundation for investors seeking steady returns.

The ETF’s recent dividend increase, coupled with its track record of monthly payouts, positions it as a middle-ground investment—offering higher yields than traditional bonds but with lower risk than equities. However, investors should remain mindful of the $24.26 NAV as of February 2025, as further declines in underlying asset values could impact distributions.

For income-focused portfolios, VABS remains a compelling option, particularly as its historical yield consistency and cost efficiency align with the demands of today’s low-yield environment.