BlackRock Science and Technology Term Trust: An Attractive Buy with Positive Outlook

BlackRock Science and Technology Term Trust (BSTZ) is an income fund offering a high dividend yield and potential for capital appreciation. Despite its strong performance, BSTZ remains an attractive buy due to its positive outlook. The fund's unique blend of science and technology stocks positions it for long-term growth and stability. With a strong track record and favorable industry trends, BSTZ is a solid investment option for those seeking income and capital appreciation.

BlackRock Science and Technology Term Trust (BSTZ), an income fund offering a high dividend yield and potential for capital appreciation, continues to present an attractive investment opportunity. Despite recent market fluctuations and changes in valuation, BSTZ's positive outlook and strong performance make it a solid choice for investors seeking income and long-term growth.

Performance and Valuation

Over the past twelve months, BSTZ's share price has increased by approximately 10.1%, with a total return of around 25.5% when including distributions. The fund's dividend yield has also improved, currently standing at approximately 12%. Although the discount to net asset value (NAV) has decreased from 8.1% to 7.6%, it remains a favorable entry point for investors. The fund's active management style and exposure to technology companies position it well for future growth, particularly with anticipated interest rate cuts by the Federal Reserve.

Fund Strategy and Holdings

BSTZ's strategy involves allocating at least 80% of its assets to equity issued by US and non-US science and technology companies. The fund's global exposure spans multiple regions, with a significant portion allocated to the United States, followed by Japan, the United Kingdom, and Canada. The top three sectors—Software & Services, Tech Hardware & Equipment, and Media & Entertainment—comprise nearly 70% of the fund's assets. Notable holdings include private investments like PsiQuantum and Databricks, as well as large-cap companies such as Nvidia (NVDA), Spotify Technology (SPOT), and MercadoLibre (MELI).

Risk Profile and Dividend Coverage

BSTZ's focus on income generation makes it more vulnerable to market downturns. In 2022, the fund experienced a total loss of 55.34% due to distributions paid out and exposure to private investments. Despite this, BSTZ's dividend coverage remains strong, with a current yield of 12%. The fund's ability to adjust distributions based on market conditions ensures long-term stability and prevents NAV erosion.

Conclusion

BlackRock Science and Technology Term Trust (BSTZ) remains an attractive buy for investors seeking income and long-term growth. With a strong track record, favorable industry trends, and a unique blend of science and technology stocks, BSTZ offers a compelling investment opportunity. Despite recent market fluctuations, the fund's positive outlook and strong performance make it a solid choice for those prioritizing income over maximizing total return potential.

References

[1] https://seekingalpha.com/article/4817423-bstz-still-an-attractive-buy-due-to-positive-outlook