These 6% Tax-Free Dividends Are Languishing (for Now). Here's When to Strike
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jul 14 2025
0mins
Source: NASDAQ.COM
Investment Strategy: The article discusses the benefits of diversifying investments, particularly through closed-end funds (CEFs) that hold municipal bonds, which offer tax-free dividends and can provide a significant yield advantage depending on tax brackets.
Market Insights: It highlights the current market situation where municipal bonds have underperformed but may rebound as investors seek safer, high-yielding alternatives amidst stock market fluctuations; specific CEFs like the abrdn National Municipal Income Fund (VFL) are recommended for their attractive discounts.
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Analyst Views on VFL
Wall Street analysts forecast VFL stock price to rise
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Current: 10.250
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Current: 10.250
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About VFL
abrdn National Municipal Income Fund (the Fund), formerly Delaware Investments National Municipal Income Fund, is a diversified closed-end management investment company. The Fund's investment objective is to provide current income exempt from regular federal income tax, consistent with the preservation of capital by investing in municipal bonds. It invests at least 80% of its net assets in securities, the income from which is exempt from federal income taxes. It also seeks to invest up to 20% of its net assets in municipal bonds with an investment rating of Ba/BB or lower, or that are unrated but judged to be of comparable quality by the Fund's investment adviser. It invests in corporate revenue bonds, education revenue bonds, electric revenue bonds, healthcare revenue bonds, housing revenue bonds, lease revenue bonds, local general obligation bonds, pre-refunded/escrowed to maturity bonds, and special tax revenue bonds. The Fund’s investment manager is abrdn, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
abrdn National Municipal Income Fund Adjusts Investment Policy
- Policy Change: The Board of Trustees of abrdn National Municipal Income Fund has approved the removal of a non-fundamental investment policy limiting investments in high-yield municipal securities to 20%, effective June 1, 2026, which is expected to enhance portfolio diversification and income potential.
- Credit Risk Consideration: In making this decision, the Board weighed the modest increase in credit risk against potential benefits, concluding that a broader investment mandate would better serve shareholder interests.
- High-Yield Securities Allocation: Following the new policy, the fund is expected to gradually increase its exposure to high-yield securities, initially targeting 30% of the portfolio, with potential increases to 30% to 50% depending on market conditions.
- Market Volatility Risks: Investors should be aware that closed-end funds' investment returns and principal values fluctuate, potentially trading below or above the net asset value, and past performance does not guarantee future results.
See More
abrdn National Municipal Income Fund Adjusts Investment Policy
- Policy Change: The Board of Trustees of abrdn National Municipal Income Fund has approved the removal of a non-fundamental investment policy that restricted investments in high-yield municipal securities to over 20% of the portfolio, effective June 1, 2026, which is expected to enhance portfolio diversification and returns.
- Credit Risk Consideration: In making this decision, the Board weighed the modest increase in credit risk against potential benefits, including higher distributions and improved long-term risk-adjusted returns, indicating a strategic shift towards a broader investment mandate.
- High-Yield Securities Exposure: Following the policy change, the fund plans to gradually increase its exposure to high-yield securities, initially targeting 30% of the portfolio and potentially rising to 30% to 50% depending on market conditions, which could significantly boost earnings potential.
- Market Volatility Awareness: Investors should be aware that closed-end fund shares may trade at a premium or discount to net asset value (NAV), leading to fluctuations in investment returns and principal value, necessitating careful risk assessment before investing.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Adjourned Special Meeting: The abrdn National Municipal Income Fund held its Special Meeting of Shareholders on April 15, 2026, and decided to adjourn to solicit additional proxies, with a new meeting date set for May 6, 2026, to ensure a quorum for voting on the reorganization proposal.
- Reorganization Proposal Vote: Shareholders are being asked to vote on the reorganization agreement between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan to optimize the fund's investment structure and potential returns.
- Proxy Materials Notification: Shareholders will receive supplemental proxy materials for further information, and the updated proxy statement is also available on the SEC's website, ensuring shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds may trade at prices above or below net asset value, and investors should be aware of market factors affecting fund performance; past performance does not guarantee future results, and shareholders should exercise caution when participating in dividend reinvestment plans.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Special Meeting Held: The abrdn National Municipal Income Fund held a Special Meeting of Shareholders on March 11, 2026, which was adjourned to solicit additional proxies to achieve the necessary quorum, with a new date set for April 1, 2026, at 11:00 AM ET, indicating the company's commitment to shareholder engagement.
- Reorganization Proposal Vote: Shareholders are being asked to vote on a proposal for the reorganization agreement between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan, reflecting the company's strategic intent to optimize asset management.
- Proxy Materials Information: Shareholders will receive supplemental proxy materials for further information, and the updated proxy statement is available on the SEC's website, ensuring that shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds' investment returns and principal values fluctuate, potentially trading above or below net asset value, and shareholders should be aware that trading at a premium may not be sustainable, which is crucial for investment decision-making.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Adjourned Special Meeting: The abrdn National Municipal Income Fund held its Special Meeting of Shareholders on March 11, 2026, and decided to adjourn to solicit additional proxies, with a new meeting date set for April 1, 2026, to ensure a quorum for voting on the reorganization proposal.
- Reorganization Vote: Shareholders are being asked to vote on the proposal for an Agreement and Plan of Reorganization between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan, indicating a strategic move towards consolidation.
- Proxy Material Notification: Shareholders will receive supplemental proxy materials for further information, and the supplemented proxy statement is also available on the SEC's website, ensuring that shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds' investment returns and principal values fluctuate, and shareholders should be aware that the trading price may be above or below the net asset value, with such premiums or discounts potentially changing with market conditions, advising caution in participating in dividend reinvestment plans.
See More
Aberdeen Investments Announces Multiple Closed-End Fund Distributions, Up to $0.21 per Share
- Distribution Payment Announcement: Aberdeen Investments' closed-end funds will pay distributions on January 30, 2026, to shareholders of record as of January 23, 2026, with amounts ranging from $0.04 to $0.21 per share, demonstrating the company's commitment to returning value to investors.
- Transparent Distribution Sources: In compliance with the 1940 Investment Company Act, Aberdeen will disclose the sources of distributions to shareholders, including net investment income and capital gains, ensuring investors have a clear understanding of the origins of their payouts.
- Flexible Distribution Policy: The distribution policy for each fund can be modified by the board at any time, indicating that while current distributions are stable, they may be adjusted in response to market conditions, which could impact investor returns.
- Tax Information Disclosure: At the end of each calendar year, Aberdeen will send shareholders a Form 1099-DIV detailing the distribution amounts and their tax treatment, aiding investors in tax planning and ensuring compliance with regulations.
See More
abrdn National Municipal Income Fund Adjusts Investment Policy
- Policy Change: The Board of Trustees of abrdn National Municipal Income Fund has approved the removal of a non-fundamental investment policy limiting investments in high-yield municipal securities to 20%, effective June 1, 2026, which is expected to enhance portfolio diversification and income potential.
- Credit Risk Consideration: In making this decision, the Board weighed the modest increase in credit risk against potential benefits, concluding that a broader investment mandate would better serve shareholder interests.
- High-Yield Securities Allocation: Following the new policy, the fund is expected to gradually increase its exposure to high-yield securities, initially targeting 30% of the portfolio, with potential increases to 30% to 50% depending on market conditions.
- Market Volatility Risks: Investors should be aware that closed-end funds' investment returns and principal values fluctuate, potentially trading below or above the net asset value, and past performance does not guarantee future results.
See More
abrdn National Municipal Income Fund Adjusts Investment Policy
- Policy Change: The Board of Trustees of abrdn National Municipal Income Fund has approved the removal of a non-fundamental investment policy that restricted investments in high-yield municipal securities to over 20% of the portfolio, effective June 1, 2026, which is expected to enhance portfolio diversification and returns.
- Credit Risk Consideration: In making this decision, the Board weighed the modest increase in credit risk against potential benefits, including higher distributions and improved long-term risk-adjusted returns, indicating a strategic shift towards a broader investment mandate.
- High-Yield Securities Exposure: Following the policy change, the fund plans to gradually increase its exposure to high-yield securities, initially targeting 30% of the portfolio and potentially rising to 30% to 50% depending on market conditions, which could significantly boost earnings potential.
- Market Volatility Awareness: Investors should be aware that closed-end fund shares may trade at a premium or discount to net asset value (NAV), leading to fluctuations in investment returns and principal value, necessitating careful risk assessment before investing.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Adjourned Special Meeting: The abrdn National Municipal Income Fund held its Special Meeting of Shareholders on April 15, 2026, and decided to adjourn to solicit additional proxies, with a new meeting date set for May 6, 2026, to ensure a quorum for voting on the reorganization proposal.
- Reorganization Proposal Vote: Shareholders are being asked to vote on the reorganization agreement between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan to optimize the fund's investment structure and potential returns.
- Proxy Materials Notification: Shareholders will receive supplemental proxy materials for further information, and the updated proxy statement is also available on the SEC's website, ensuring shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds may trade at prices above or below net asset value, and investors should be aware of market factors affecting fund performance; past performance does not guarantee future results, and shareholders should exercise caution when participating in dividend reinvestment plans.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Special Meeting Held: The abrdn National Municipal Income Fund held a Special Meeting of Shareholders on March 11, 2026, which was adjourned to solicit additional proxies to achieve the necessary quorum, with a new date set for April 1, 2026, at 11:00 AM ET, indicating the company's commitment to shareholder engagement.
- Reorganization Proposal Vote: Shareholders are being asked to vote on a proposal for the reorganization agreement between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan, reflecting the company's strategic intent to optimize asset management.
- Proxy Materials Information: Shareholders will receive supplemental proxy materials for further information, and the updated proxy statement is available on the SEC's website, ensuring that shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds' investment returns and principal values fluctuate, potentially trading above or below net asset value, and shareholders should be aware that trading at a premium may not be sustainable, which is crucial for investment decision-making.
See More
abrdn National Municipal Income Fund Holds Adjourned Special Meeting
- Adjourned Special Meeting: The abrdn National Municipal Income Fund held its Special Meeting of Shareholders on March 11, 2026, and decided to adjourn to solicit additional proxies, with a new meeting date set for April 1, 2026, to ensure a quorum for voting on the reorganization proposal.
- Reorganization Vote: Shareholders are being asked to vote on the proposal for an Agreement and Plan of Reorganization between the abrdn National Municipal Income Fund and MFS Municipal Income Trust, with the Board of Trustees unanimously recommending support for the plan, indicating a strategic move towards consolidation.
- Proxy Material Notification: Shareholders will receive supplemental proxy materials for further information, and the supplemented proxy statement is also available on the SEC's website, ensuring that shareholders are well-informed about the reorganization details and potential impacts.
- Investment Risk Advisory: Closed-end funds' investment returns and principal values fluctuate, and shareholders should be aware that the trading price may be above or below the net asset value, with such premiums or discounts potentially changing with market conditions, advising caution in participating in dividend reinvestment plans.
See More
Aberdeen Investments Announces Multiple Closed-End Fund Distributions, Up to $0.21 per Share
- Distribution Payment Announcement: Aberdeen Investments' closed-end funds will pay distributions on January 30, 2026, to shareholders of record as of January 23, 2026, with amounts ranging from $0.04 to $0.21 per share, demonstrating the company's commitment to returning value to investors.
- Transparent Distribution Sources: In compliance with the 1940 Investment Company Act, Aberdeen will disclose the sources of distributions to shareholders, including net investment income and capital gains, ensuring investors have a clear understanding of the origins of their payouts.
- Flexible Distribution Policy: The distribution policy for each fund can be modified by the board at any time, indicating that while current distributions are stable, they may be adjusted in response to market conditions, which could impact investor returns.
- Tax Information Disclosure: At the end of each calendar year, Aberdeen will send shareholders a Form 1099-DIV detailing the distribution amounts and their tax treatment, aiding investors in tax planning and ensuring compliance with regulations.
See More
