Buy Nuveen Quality Preferred Income Fund (JTP)   8 comments

Last week, I was researching preferred stock etf’s. Today, Marshall mentioned a Nuveen closed-end fund, and my wheels started turning. After a little research, I discovered that Nuveen also has a preferred share clsoed-end fund, Nuveen Quality Preferred Income Fund (JTP). This CEF compares quite favorably to the preferred stock etf’s, coming out with a slightly higher real dividend yield, 6.19%, after accounting for their high expense ratio, 1.75%. Their actual dividend yield is running about 7.9%. They only get 2 stars from Morningstar, mainly because of their high risk profile, which allows them to trade down into S&P “B”-rated preferred shares (although they do sell if a preferred share drops below that rating). However, they are also trading at a 10% discount to net asset value. In addition, they buy some preferred shares internationally, so there is a bit more diversification of risk in that regard. Like most preferred stock etf’s, there is lots of financial sector exposure, so be aware.

I will be adding a small position to my 401k today.

UPDATE 2:50 pm EST: I added JTP at a dollar cost average of $7.93. Fidelity ain’t cheap on their trading fees!


Posted January 21, 2014 by edmcgon in 401(k), Portfolio Moves

8 responses to “Buy Nuveen Quality Preferred Income Fund (JTP)

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  1. There are a lot of interesting close ended funds. There is even some specializing in covered calls. BOE for example yields 8.25% and trades at a 12% discount to NAV. (Trader – do you work there?)

  2. Ed – What do you think of BGE.PB?

    • George,
      That’s a tough call. The preferred shares are past their call date, so there is a risk there. However, from what little I’ve seen of utility preferreds, the utilities seem to let their preferreds keep running. If interest rates got a lot cheaper (not likely), then it might get called.

      On the other hand, their common stock (EXC) pays only 2% less than the preferred.

      It all comes down to how much safety do you want, versus how much dividend do you want? For more safety, I might go with the common. If you can handle a touch more risk, then the preferred isn’t too bad, and it is trading at a discount now.

  3. Thanks again Ed!

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