BlackRock Science and Technology Trust’s High-Yield Dividend Strategy Amid Market Underperformance

BlackRock Science and Technology Trust (BST) has reaffirmed its commitment to income-focused investors with its latest $0.25-per-share dividend declaration for May 2025. This monthly payout, which aligns with BST’s consistent dividend schedule, maintains an annualized yield of approximately 8.8% as of mid-May, positioning the fund as a compelling income vehicle despite its lagging performance relative to broader markets.

Ask Aime: "BlackRock's latest $0.25 dividend declaration for May 2025 offers a 8.8% yield, attracting income-focused investors despite BST's lagging performance compared to broader markets."

The Dividend Playbook: Consistency and Yield

BST’s dividend strategy is unambiguous: prioritize steady income over growth. With a $0.25 monthly dividend, BST delivers a $3.00 annualized payout, translating to an 8.8% yield based on its mid-May stock price of $34.00. This approach has remained consistent since at least 2024, with no gaps or reductions in payouts. The ex-dividend date of May 15 ensures investors holding shares by that date will receive the May 30 payment, reinforcing BST’s reliability for those seeking predictable cash flows.

Valuation and Performance: A Trade-off Between Income and Growth

BST’s stock price has fluctuated narrowly in early 2025, closing at $34.09 on May 6 and hovering around that level through mid-May. While its year-to-date return of 4.33% edges into positive territory, the fund has significantly underperformed the S&P 500 over longer horizons. Over one year, BST’s return of 1.84% lags the S&P 500’s 8.09%, and over five years, BST’s 45.83% return trails the index’s 94.61%.

Ask Aime: What's a good stock to buy for steady dividends?

This divergence highlights BST’s focus on income over capital appreciation. With a trailing P/E ratio of 4.33 and a price-to-sales ratio of 4.32, BST appears undervalued relative to growth stocks but is structured to favor dividend production over stock price growth. Its top holdings—NVIDIA (11.74%), Microsoft (9.62%), and Apple (6.32%)—are stalwarts of the tech sector, but their performance has not insulated BST from broader market headwinds.

Risks and Considerations

BST’s strategy carries trade-offs. Its 1.09% expense ratio is higher than many passive ETFs, eating into returns over time. Additionally, the fund lacks an ESG rating due to insufficient MSCI coverage of its holdings, a potential red flag for socially conscious investors. While the dividend yield is enticing, BST’s underperformance underscores the need for investors to weigh income against long-term growth prospects.

Conclusion: A Reliable Income Stream, but Not for Growth Bulls

BlackRock Science and Technology Trust’s $0.25 monthly dividend reinforces its value proposition for income-focused portfolios. With an annualized yield of 8.8% and a disciplined payout history, BST offers stability in volatile markets. However, its underperformance relative to the S&P 500—especially over five years—highlights the trade-off between income and growth.

Investors should consider BST as a complement to, rather than a replacement for, growth-oriented holdings. Its high expense ratio and reliance on large-cap tech stocks may limit its appeal to those seeking both income and outperformance. For now, BST’s dividend remains a standout feature, but its valuation and performance suggest it is best suited for conservative investors prioritizing steady cash flows over capital gains.

In summary, BST’s dividend strategy is a double-edged sword: it delivers reliable income but comes with costs and growth limitations. Investors must evaluate whether the fund’s high yield justifies its underperformance—and whether its tech-heavy portfolio aligns with their broader market outlook.