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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
|---|
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S&P U.S. Preferred Stock Index
|
848.03 |
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S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
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S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
|---|
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
|---|
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Nuveen Premium Income Municipal Fund 2: A Good Core Holding |
Seeking Alpha - Jan. 21, 2011 - by George Spritzer
This is the first of a series of articles on specific municipal bond closed-end funds, and is a follow-up to my last article on asset location strategies. There is no “best” bond for everyone, since the selection of a municipal bond closed-end fund depends on the investor as much as the fund. Important factors are the state of residence, risk tolerance with regard to defaults, interest rate risk and volatility, trading liquidity, AMT exposure and desired distribution amounts.
I have selected the Nuveen Premium Income Municipal Fund 2 (NPM) for the first report, because it is a good core holding for many investors. It is a national muni fund with holdings in many states, has above average credit quality, good trading liquidity and low AMT percentage.
I will be discussing 14 factors you can consider when evaluating any municipal bond closed-end fund.
Factor #1: What Is the Distribution Rate?
Many closed-end investors look almost exclusively at the distribution rate. While this is a mistake, it is important to consider the distribution rate when you evaluate a fund, because so many other investors consider it so important.
In the current market, there are three “tiers” of national muni bond closed-end funds. The higher risk leveraged funds have distribution rates of 8% or more. The middle tier lower risk leveraged funds yield around 7%, and the safer, low volatility funds, which are mainly unleveraged, yield in the 5%-6% range.
NPM is a high quality fund in the middle tier and currently has a distribution yield of 7.06%. It pays a regular monthly dividend of $0.074 per share or an annual distribution of $0.888. This does not include a special year-end dividend of $0.005 paid at the end of 2010.
Factor #2: What Is the Likelihood the Fund Can Raise Its Monthly Dividend?
To determine this, I look at the Average Earnings/Current Dividend Ratio. This ratio tells you whether or not a fund is earning its current dividend. If the value is well above 100%, it means the fund can easily afford to raise its distribution rate.
For the complete article.
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Income Security Recommendation January 2013 Issue.
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