Muni Bonds and a fool's criticism
July 09, 2010
– Comments (8) |
RELATED TICKERS: NQU
One of our most frequent posters has criticized me directly for my interest in and recommendation of NQU (Nuveen Quality Muni Bonds). Clearly he/she/it hasn't the slightest understanding of NQU nor of Nuveen in general. Thus the downgrade from Fool to fool.
The trivial case can be made that all of our cities, counties and states are broke. Therefore, it is posited, all muni bonds will crash to zero. That trivial conclusion is mindless. There are thousands of "muni" bonds in circulation. Some are supported by the general obligations of the issuing entity and some by the revenues of the project being supported.
The viability of these issuing entities is a subject of much concern, as is the revenue available or accruing to the issuing entities. Nuveen has been in business for many decades, and this is their expertise. They sort from among the thousands of available munis and select those they deem safe and rewarding.
Now some facts. NQU pays a 6.51% dividend, tax-free. At a 28% tax rate, that is a 9.4% return pretax. After the crash of Q3 2008 from 14 to 9, NQU is now at its highest point in the last three years. And all along the way, NQU has continued its dividends.
NQU's beta is 0.1486. It typically trades 73,000 shares daily from its 54,000,000 shares outstanding. Today its trading range was $14.51 to $14.61 (where it finished at its 52 week high). Not a day-trader's nirvana.
So I advise you Fools who are seeking income to vet NQU thoroughly. Keep the pressure on munis in mind. But trust Nuveen to respond quickly. Do your own thorough due diligence.
But don't respond to the rants of our resident fool by ignoring this income opportunity. He/she/its view of the world is simplistic and mindless. Nuance is not available in those endless blogs.
Full disclosure: I am making $3800 monthly, tax free, from NQU. How you doing, fool?
Fool on, guys and gals.
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