HFRO: One Of The Best Investment-Grade Preferreds

2026-02-05 02:28:48 ET

Highland Income Fund's ( HFRO ) investment-grade rated preferreds will continue to form a core of my fixed-income portfolios on the back of their significant current yield, healthy spreads to the U.S. 10-year Treasury yield ( US10Y ), and the extreme depth of coupon coverage and strong asset base. HFRO is a closed-end fund ("CEF"), a type of publicly traded investment company, that issues a fixed number of shares to invest in a basket of assets as per its investment objectives. The CEF, with $880 million in assets as of its fiscal 2025 third quarter, is focused on both the debt and equity sides of commercial real estate at 71.8% of assets, with a 29% allocation to non-real estate assets. This non-CRE allocation also stretches across debt, public and private equity, and structured products. However, the CEF is currently undergoing a reallocation away from the dominance of common equity. The CEF generated fiscal 2025 third-quarter net investment income of $8.9 million. ...

Read the full article on Seeking Alpha

For further details see: