Flaherty & Crumrine Total Return Fund (FLC) Stock

The Flaherty & CrumrineTotal Return Fund's 6.50% yield is lower than its peers, making it less attractive for income-focused investors. The fund's performance has been inconsistent, with significant underperformance compared to peers over the past five years. Despite recent gains, the fund's future performance is uncertain due to potential inflation and limited upside from expected interest rate cuts.

Flaherty & Crumrine Total Return Fund is set to benefit from rate cuts over the next year. The fund was negatively impacted by higher rates as borrowing costs rose materially, and risk-free rates pressured the underlying portfolio. Rate cuts should lead to higher net investment income, and we are already seeing those distribution increases in 2024.

Flaherty & Crumrine Total Return Fund has been negatively impacted by Fed rate hikes, causing borrowing costs to explode higher, while their portfolio was also hit by higher rates. FLC recently raised its distribution, and that provides a glimmer of hope that stabilization is taking place. The fund has a potentially brighter future moving forward, and the large discount present could be a further opportunity.

Flaherty & Crumrine Total Return Fund has suffered from multiple distribution cuts, resulting in a low forward yield of 6.81%. The FLC closed-end fund's share price has increased by 9.53% since the last article, outperforming the preferred stock index and bond index. The fund's exposure to the banking sector has increased, and its leverage remains high, posing risks for investors.

Flaherty & Crumrine Total Return Fund has continued to face significant pressure from rising rates. FLC's share price has also been significantly impacted due to the fund's discount widening dramatically.

The Flaherty & Crumrine Total Return Fund is a fixed-income fund that primarily invests in preferred stock. The fund has experienced disappointing performance due to rising interest rates, but its high current yield is attractive. FLC's leverage and distribution cuts may be concerning, but its current discount on net asset value makes it a reasonable investment option.

We had suggested a trade for these two preferred CEFs from Flaherty and Crumrine. We examine where that stands today and update that recommendation.

Flaherty & Crumrine Total Return Fund is a fixed income closed-end fund. The CEF focuses on financials preferred equity, and is down roughly -10% year to date, while the unleveraged fund PFF is flat on the year.