JRI - CEF With 8% Dividend Offering Global Exposure

Aug.20.14 | About: Nuveen Real (JRI)


8.0% yield with no return of capital.

Discount to NAV has been narrowing.

Offers exposure to global infrastructure projects and REITs.

Price volatility creates trading opportunities.

The Nuveen Real Asset Income and Growth Fund (NYSE:JRI) is a two-year-old CEF that offers investors exposure to global real asset investments, including infrastructure projects and REITs. I usually shy away from young funds, but a secure dividend and superior NAV growth are very attractive. JRI trades at a 6.6% discount to NAV, although this is above its historical levels. NAV growth is above 20% for the year.

JRI Chart

JRI data by YCharts


JRI is managed by a team of three managers that have been in place since the Fund's inception. Jay Rosenberg is the creator of Nuveen's global infrastructure strategy and also co-manages their product. John Wenker heads the real asset strategy and is a member of Nuveen's Asset Allocation Committee. Jeffrey Schmitz co-manages Nuveen's High Income Bond product. Unfortunately, InsiderInsight.com does not have any information as to whether or not the managers own any JRI.


JRI pays a monthly $0.1345 dividend. In January of this year, the Fund also distributed capital gains for 2013. An examination of the Annual Report reveals that the Fund needs to generate net investment income of $15.8MM to cover the monthly dividend. In 2013, it generated $18.9MM of gross investment income and $14.9MM net of expenses. The balance of $0.9MM was covered by capital gains. Conservative investors can rest assured that the Fund has not had to raise capital to cover the dividend.

Portfolio and NAV Growth

According to the Q2 Fact Sheet, the Fund is invested in 219 securities. 33.6% are issued by foreign corporations. The Fund's 3 largest holdings are all real estate companies: Summit Hotel Properties, Apollo Commercial Real Estate and Colony Financial.

The Fund has been able to grow NAV steadily over the last year. Its weighted average NAV growth has been +28.1%.

Qtr YTD 1yr Wgtd Avg
+5.5% +20.3% +27.2% +28.1%
Click to enlarge

Source: Morningstar.com

Premium/Discount History

JRI is currently trading at a 6.6% discount to NAV. This is narrower than the one-year weighted average of -8.2%. Should the Fund revert to the mean, the Fund could fall 1.9%.

6mo 1yr Wgtd Avg
-7.2% -8.7% -8.2%
Click to enlarge

Source: CEFConnect.com

Alternatives to the Fund

Morningstar categorizes JRI as a World Allocation Fund. It lists these 5 Funds as belonging to this category: Nuveen Diversified Dividend & Income (NYSE:JDD), Virtus Total Return (NYSE:DCA), Calamos Global Dynamic (NASDAQ:CHW), Delaware Ehnanced (NYSE:DEX) and Eaton Vance Global Dividend (NYSE:ETO).

JRI stacks up well against these 5. Its discount to NAV is not as deep as the others, but its 8.0% dividend is 100% covered. It has the highest YTD NAV growth and its 1-year growth is only 0.2% below DCA's.

Fund Pr/Di Yield Div Cov NAV YTD NAV 1yr
JRI - 6.6% 8.0% 100% +20.3% +27.2%
JDD -11.5% 8.5% 72% +11.5% +19.3%
DCA - 9.9% 8.3% 100% +16.1% +27.4%
CHW - 6.2% 8.7% 21% + 5.0% +16.5%
DEX -10.0% 7.1% 76% + 7.6% +16.8%
ETO - 5.8% 7.1% 100% + 6.6% +20.9%
Click to enlarge

Source: Morningstar.com


For investors that are willing to look at a relatively unseasoned Fund in the global infrastructure space, JRI is a solid choice. Its 8.0% dividend is primarily funded by Investment Income and NAV growth has been strong. My primary concern is that its discount to NAV is above its historical average.

Disclosure: The author is long JRI.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.