Flaherty & Crumrine Preferred and Income Opportunity Fund

PFO

Market cap $124M

Closed-end funds provide a unique opportunity due to their structure to invest at deep discounts to the actual underlying value of the holdings. An absolute discount isn't the best measuring stick for a worthwhile investment, but the relative discounts to historical levels often are. We take a look at two different CEFs today, both trading at attractive discount levels, but they are actually quite different from each other.

Preferreds offer attractive post-tax yields and favorable tax treatment compared to corporate bonds, making them appealing income assets for investors. Active ETFs like FPE and FPEI, and select CEFs such as PFO and FFC, have outperformed passive ETFs, which struggle with high fees and index-related inefficiencies. Individual preferreds allow for targeted interest rate exposure, relative value opportunities, and avoidance of fund management fees.

This report screens ~400 closed-end funds for those with distribution coverage above 100%, aiming to identify lower-risk income opportunities for investors. Key metrics include premium/discount, z-score, leverage, baseline expense, and coverage. Top picks feature funds that offer high yields, deep discounts, and strong coverage, highlighting attractive value and income potential.

PASADENA, Calif.--(BUSINESS WIRE)--The Boards of Directors of Flaherty & Crumrine Preferred and Income Fund Incorporated (NYSE: PFD), Flaherty & Crumrine Preferred and Income Opportunity Fund Incorporated (NYSE: PFO), Flaherty & Crumrine Preferred and Income Securities Fund Incorporated (NYSE: FFC), Flaherty & Crumrine Total Return Fund Incorporated (NYSE: FLC) and Flaherty & Crumrine Dynamic Preferred and Income Fund Incorporated (NYSE: DFP) today announced that they have declared per share dividends for November 2025

Flaherty & Crumrine Preferred Income Opportunity Fund remains a buy, offering a 6.3% yield and trading at a 6.54% discount to NAV. PFO provides diversified exposure to preferred securities, with a focus on banks, and benefits from potential interest rate cuts boosting both price and distribution sustainability. While PFO underperforms traditional financial ETFs in total return, it excels in income generation, making it suitable for income-focused investors, especially in tax-advantaged accounts.

This report screens ~400 closed-end funds (CEFs) for those with 100%+ net investment income coverage, highlighting lower risk of distribution cuts. Top lists identify CEFs with the widest discounts, most attractive z-scores, highest covered yields, and best combinations of value and income. Investors are encouraged to use these rankings as a starting point for due diligence, not as final buy or sell recommendations.

The investment case for closed-end funds (CEFs) is weak now due to tight discounts, high leverage costs, and expensive underlying assets. Most CEFs do not deliver sustainable alpha, and lower-fee actively managed ETFs now offer similar exposures with better economics. We have reduced our CEF allocation, favoring alternatives like BDCs, select ETFs, preferreds, and bonds for better value and risk/reward.

Monthly-paying income investments can be attractive for retirees, but also for those still accumulating wealth, when reinvested for compounding income over time. Fixed-income focused closed-end funds can provide those attractive monthly distribution yields that income-focused investors are looking for. Today, we are looking at two funds that provide a monthly payout plus are trading at attractive discounts.

PASADENA, Calif.--(BUSINESS WIRE)--The Boards of Directors of Flaherty & Crumrine Preferred and Income Fund Incorporated (NYSE: PFD), Flaherty & Crumrine Preferred and Income Opportunity Fund Incorporated (NYSE: PFO), Flaherty & Crumrine Preferred and Income Securities Fund Incorporated (NYSE: FFC), Flaherty & Crumrine Total Return Fund Incorporated (NYSE: FLC) and Flaherty & Crumrine Dynamic Preferred and Income Fund Incorporated (NYSE: DFP) today announced that they have d.

I rate PFO a buy due to its attractive discount to NAV and a compelling 6.6% dividend yield for income-focused investors. PFO's performance is highly sensitive to interest rates; future rate cuts should act as a strong catalyst for price and NAV growth. The fund's heavy use of leverage and concentration in financials increase risk, but its diversified preferred securities portfolio offers stability.