Stock with an 8.5% yield thrives in market turmoil
News Article: Nuveen Covered-Call CEFs Offer Attractive Discounts and High Yields
Investors seeking income opportunities with a focus on high yields and discounted prices may find the Nuveen covered-call closed-end funds (CEFs) particularly appealing. As of mid-August 2025, these funds, including the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), and Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX), offer attractive yields and current discounts to their net asset values (NAV).
DIAX: A Cheaper Option with a Higher Yield
The Nuveen Dow 30 Dynamic Overwrite Fund (DIAX) is currently trading at a near-11% discount to its NAV, offering a yield of around 8.4–8.5%. This makes it one of the cheapest high-yield CEFs in the market, despite its higher yield compared to QQQX and SPXX. Over the past few months, DIAX has become unusually cheap, trading at a larger discount than typical for high-yield CEFs.
SPXX and QQQX: Smaller Discounts and Lower Yields
SPXX, on the other hand, trades at a smaller 1.9% discount, offering a yield of around 7.6%. QQQX holds a mid-level discount and yield position, trading at a roughly 7.5% discount with a yield comparable to DIAX at around 8.5%.
Volatility and Market Conditions
These option strategies performed best in volatile markets, which could increase demand for DIAX and cause its near-11% discount to shrink. The current market has seen an increase in volatility, as indicated by the spike in the VIX, the market's "fear gauge", and a shift in the CNN Fear and Greed index from extreme-greed to neutral.
The market is currently following an age-old course where stocks sell off due to rising investor fear, followed by recovery. A disappointing jobs report from the Bureau of Labor Statistics last Friday has potentially triggered a new selloff. However, it's important to note that despite the potential selloff, the economy is still adding jobs and is far from the calamities of the pandemic.
Investment Opportunities
For income investors seeking both yield and a larger discount, DIAX may offer a compelling entry. SPXX, despite having a smaller discount, is priced for premium liquidity and popularity despite its lower yield. QQQX holds a moderate discount and yield position.
Investors are advised to prepare to buy, as these funds, particularly DIAX, could provide a good opportunity to monetize rising volatility. These funds were highlighted in the July 24, 2025, Contrarian Outlook article.
[1] Net asset value (NAV) is the total value of a fund's assets, minus its liabilities, divided by the number of shares outstanding. [2] Data sources: Yahoo Finance, Nasdaq, and Nuveen's official website. [3] This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own due diligence before making investment decisions.
- In the field of finance and investing, technology-driven analysis can help monitor the performance of high yield funds like the Nuveen Covered-Call CEFs, such as DIAX, SPXX, and QQQX, to identify opportunities for dividend investing and retirement income.
- The integration of technology can also aid in assessing market conditions, volatility, and the potential impact on closed end funds, allowing investors to make informed decisions about investment opportunities in funds like the Nuveen Covered-Call CEFs, particularly in situations where funds offer high yields and significant discounts to their net asset values (NAV), such as DIAX.
