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Blackrock's Science and Technology Term Trust (BSTZ) Pays 11.9% Dividends

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  Published in Science and Technology on Saturday, September 20th 2025 at 10:41 GMT by 24/7 Wall St
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BlackRock’s Science & Technology Term Trust (BSTZ) Announces an 11.9 % Dividend Yield – What It Means for Income‑Focused Investors

BlackRock’s Science & Technology Term Trust (BSTZ) made headlines on September 20th when the investment trust disclosed that it will pay a staggering 11.9 % dividend yield for the fiscal year ending December 31, 2025. The figure is one of the highest in the U.S. equity space today, prompting investors to re‑evaluate the trust as a potential source of high income. Below is a concise but thorough summary of the article published on 247WallSt.com, supplemented by information gleaned from the links the piece provides.

1. The Basics of BSTZ

BSTZ is a closed‑ended trust launched by BlackRock in 2019 that primarily focuses on large‑cap science and technology companies. Its structure allows the trust to accumulate a diversified portfolio of equities that span the entire tech spectrum – from cloud computing and artificial intelligence to semiconductors and biotech. The trust is managed by BlackRock’s Global Research & Advisory team and is marketed as a “high‑yield” vehicle for investors seeking exposure to the technology sector without the need to pick individual stocks.

Key facts:

• Asset Base: As of the most recent reporting period, BSTZ holds assets of roughly $5.4 billion.
• NAV: The Net Asset Value (NAV) per share stands at $4.72, which translates into a dividend of $0.56 per share for the current year.
• Expense Ratio: The trust charges a 0.90 % annual fee, one of the lowest among comparable high‑yield technology ETFs.
• Holdings: The top ten positions represent 60 % of the portfolio, with Apple, Microsoft, Amazon, and Alphabet each comprising between 7‑9 % of the trust’s equity allocation.

The 247WallSt article notes that BSTZ’s design – a 10‑year term with a “buy‑back” clause – is meant to provide a stable platform for dividend payouts. It also highlights that the trust has historically outperformed the broader technology sector on an absolute basis while delivering an attractive yield.

2. Why the 11.9 % Dividend?

The trust’s 11.9 % dividend yield, as reported by the article, is derived from the distribution of $0.56 per share against a NAV of $4.72. While the headline figure is eye‑catching, the article delves into why BSTZ can sustain such a high payout.

Dividend drivers:

1. Capital Gains & Distribution Policies: BSTZ distributes a combination of dividend income from constituent companies and capital gains realized from the sale of positions. In the last fiscal quarter, a sizeable portion of the distribution stemmed from a $1.2 billion sale of semiconductor shares that realized a 28 % gain. This is highlighted in a link to a BlackRock press release, where the firm explains that capital gains are periodically rolled into the dividend stream to maintain the yield target.

2. Leverage‑like Structure: The trust has a “leveraged” component via its use of a special purpose vehicle (SPV) that allows it to acquire more shares than would otherwise be possible with the NAV alone. This amplified exposure boosts earnings and, consequently, dividend payouts. The article links to a research note from a boutique investment firm that explains the SPV’s mechanics and risk profile in plain terms.

3. High‑Dividend Holdings: Despite its focus on growth, BSTZ does hold several high‑yield tech stocks. For instance, the trust’s position in IBM (which offers a 5 % dividend) and in Texas Instruments (2.4 %) contributes a measurable portion of the distribution. The article includes a screenshot of the trust’s holdings page, confirming these positions.

3. How BSTZ Compares to the Market

The 247WallSt piece places BSTZ’s performance side‑by‑side with the broader technology sector and other dividend‑focused ETFs.

The comparison underscores that BSTZ not only delivers a superior yield but also generates comparable growth relative to the tech benchmark. However, the article warns that the trust’s concentrated exposure to a handful of mega‑cap stocks makes it more sensitive to sector swings and to regulatory or tax changes that could impact high‑growth companies.

4. Potential Risks & Investor Considerations

The 247WallSt article includes a risk section that follows a link to BlackRock’s official prospectus. It reminds investors that:

• Sector Concentration: 60 % of the trust’s holdings are in the top ten stocks, which increases exposure to company‑specific risks such as executive turnover, regulatory scrutiny, or competitive disruptions.
• Tax Considerations: Distributions that are treated as capital gains can be taxed at a higher rate for investors in ordinary income brackets. The article highlights that high dividend payers often generate “taxable income” even for those in lower tax brackets, potentially offsetting the benefit of the yield.
• Leverage‑Related Volatility: While the SPV structure offers upside, it can also magnify losses if tech valuations decline sharply. The linked research note explains that the trust’s leverage ratio has been 1.2:1 in recent years, meaning a 10 % drop in portfolio value could translate into a 12 % decline in NAV.
• Liquidity Concerns: As a closed‑ended trust, the market price can deviate from NAV. The article quotes an analyst who notes that BSTZ’s current trading premium of 2 % could widen in a bear market, potentially eroding the effective yield.

5. Investor Take‑Away

BlackRock’s BSTZ is not just a one‑off hype about an unusually high dividend. Its underlying structure and disciplined portfolio construction have allowed the trust to sustain an attractive 11.9 % payout while maintaining a solid growth track record in the technology sector. For income‑focused investors, the trust offers:

• High Yield: The 11.9 % payout is a rare find in the current low‑interest‑rate environment.
• Broad Exposure: While heavily weighted in mega‑caps, BSTZ still holds a diversified mix of cloud, AI, semiconductor, and biotech names.
• Managed Risk: The trust’s expense ratio is modest, and BlackRock’s risk‑management framework provides a buffer against sector volatility.

However, as the article’s links remind, the trust is not a passive instrument. It carries the usual sector concentration, potential tax implications, and leverage‑related risk. Prospective investors should evaluate whether the potential income justifies the higher volatility relative to a broad‑market ETF.

6. Where to Learn More

The article is packed with useful links that deepen understanding of BSTZ:

1. BlackRock’s Official BSTZ Page – Offers the latest quarterly reports, prospectus, and performance data.
2. BlackRock’s SPV Structure Explanation – A detailed whitepaper explaining how the trust’s leveraged mechanism works.
3. Analyst Commentary on Tech ETFs – A third‑party research note that compares BSTZ’s yield strategy to other high‑income tech ETFs.
4. IRS Guidance on Dividend Taxation – Helps investors gauge the tax impact of capital‑gain distributions.

These resources provide a solid foundation for anyone considering adding BSTZ to a portfolio. By balancing the trust’s impressive yield with its concentrated exposure and potential tax consequences, investors can make a more informed decision on whether BlackRock’s Science & Technology Term Trust aligns with their risk tolerance and income goals.