Triple-Factor Closed-End Fund Report, September 2026: HFRO's Discount Keeps Widening
Our Triple-Factor screen identifies closed-end funds combining a yield above 6.5%, distribution coverage above 90%, and a discount to NAV, screening over 400 CEFs as of the close of September 15, 2026. Portfolio holdings Highland Opportunities and Income (HFRO), BNY Mellon High Yield Strategies (DHF), PIMCO Dynamic Income Opportunities (PDO), and Blackstone Strategic Credit 2027 (BGB) all rank among this month's top lists. As a reminder, these top lists are meant to be preliminary shortlists for further research, and are not meant to be the final analysis for a buy or sell decision.
A Simple Strategy To Get 6.5% Dividends From Surging Bond Yields
Let's talk about this latest pop in Treasury yields and what it really means for those of us looking to save for (and generate reliable income in!) retirement.
HFRO: Assessing The New $100 Million Share Buyback Program
Highland Opportunities and Income Fund launches a new $100 million, two-year share repurchase program, with $20 million to be deployed immediately. Saba Capital's activist accumulation and the buyback program create a tactical floor for HFRO's share price, narrowing the discount to NAV. HFRO's real estate-heavy, illiquid asset base poses execution and liquidity risks as buybacks shrink the portfolio and concentrate holdings.
HFRO: The Series B Preferred Shares Look Attractive
Highland Opportunities and Income Fund (HFRO) offers Series B Preferred Shares (HFRO.PR.B) with an 8.25% yield and stabilized NAV amid a -46% discount. Saba Capital's 9.4% stake in HFRO common shares signals activist scrutiny and potential for NAV discount normalization, benefiting preferred holders. HFRO.PR.B demonstrates exceptional price stability, outperforming CRE REIT preferreds during recent market volatility, aided by 1940 Act asset coverage protections.
HFRO: One Of The Best Investment-Grade Preferreds
Highland Income Fund's preferreds offer an 8.35% yield at a 36% discount to par, underpinned by investment-grade ratings and real asset exposure. HFRO's 71.8% allocation to commercial real estate, low 27.81% regulatory leverage, and broad asset diversification enhance preferred safety despite some illiquid holdings. Preferreds trade at 64 cents on the dollar, providing a 405 basis points spread over the 10-year Treasury, with potential for discount narrowing as risk appetite returns.
Triple-Factor Closed-End Fund Report, August 2025 (Stanford Chemist)
I use a systematic 'Triple-Factor' screen to identify CEFs with high yield, strong coverage, and discounts to NAV for optimal risk/reward. Top candidates offer yields above 7.5%, coverage above 90%, and trade at discounts, providing both income and potential capital appreciation. While Highland Opportunities and Income (HFRO) scores highly, I view it as speculative due to past controversies, despite activist involvement as a potential catalyst.
HFRO: Forget The Common, Get 8% A Yield From The Preferreds
When management teams embark on a grand new journey, it's essential to have common shareholder buy-in. If the vision isn't readily received, it can cause issues in the company's public performance. But income investment opportunities remain. We show ways to align better than management's goals, all while getting paid.
This Is The Cheapest 8%+ Dividend I've Ever Seen
I know it's easy to get discouraged by the lack of bargains (not to mention the pathetic yields) available to us today, after stocks bounced back from the tariff-driven selloff.
HFRO: Controversial Fund, But May Be Too Cheap With A Massive Discount To NAV
HFRO trades at a massive 57%+ discount due to illiquid assets, management concerns, and a controversial distribution cut. The fund's real estate-heavy, complex portfolio and persistent NAV discount create both risk and unique trading opportunities for active investors. Alpha can be generated from the high discount and 9%+ distribution yield, especially if management resumes aggressive share buybacks.
Income-Covered Closed-End Fund Report, March 2025
The Income-Covered CEF Report screens funds with >100% distribution coverage, reducing the risk of distribution cuts and potential price declines. Key metrics: premium/discount, z-score, leverage, baseline expense, and coverage. Focus on funds with wide discounts, negative z-scores, and high yields. Explore top lists for further research; these shortlists are not final buy/sell recommendations. Always verify coverage ratios with official fund documents.
Preferreds Weekly Review: The Risk Of Preferreds Dilution
We take a look at the action in preferreds and baby bonds through the second week of March and highlight some of the key themes we are watching. Preferred stocks saw a slight gain over the week, driven by stable spreads and a Treasury rally, though most sectors are still down for the month. Highland Opportunities and Income Fund's new preferred HFRO.PR.B has similar economics to HFRO.PR.A but lower asset coverage, raising concerns about future preferred issuances.
HFRO: A-Rated Preferred Shares With 8% Yield
Highland Opportunities and Income Fund's tender offer was a bit harsh on the common and the preferreds. Moody's downgraded HFRO's preferred shares due to high illiquid asset exposure and deteriorating fixed-charge coverage, with another downgrade likely imminent. We assess the merits of the common and preferred shares post the new issuance.
