BST: Get Paid An 8.4% Yield For Owning Tech Stocks

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BlackRock Science and Technology Trust offers tech exposure with an 8.4% yield through an option writing strategy, focusing on tech stocks with AI growth potential, including Nvidia.The fund has a ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBST: Get Paid An 8.4% Yield For Owning Tech Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-08 23:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4725645-bst-get-paid-an-8-4-percent-yield-for-owning-tech-stocks><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>BlackRock Science and Technology Trust offers tech exposure with an 8.4% yield through an option writing strategy, focusing on tech stocks with AI growth potential, including Nvidia.The fund has a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4725645-bst-get-paid-an-8-4-percent-yield-for-owning-tech-stocks\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BST","symbol_name":"BlackRock Science and Technology Trust","start_time":0,"source_url":"https://seekingalpha.com/article/4725645-bst-get-paid-an-8-4-percent-yield-for-owning-tech-stocks","article_id":"2474408437","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/155095389/image_155095389.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2474408437","pubTimestamp":1728402343,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"BlackRock Science and Technology Trust offers tech exposure with an 8.4% yield through an option writing strategy, focusing on tech stocks with AI growth potential, including Nvidia.The fund has a tri","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BST":"BlackRock Science and Technology Trust"},"translate_title":"BST：持有科技股可获得8.4%的收益率","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BST":0.9},"content_text":"BlackRock Science and Technology Trust offers tech exposure with an 8.4% yield through an option writing strategy, focusing on tech stocks with AI growth potential, including Nvidia.The fund has a triple mandate: current income, short-term, and long-term capital gains, achieved by selling call options.Trading at a 5% discount to NAV, BST presents an attractive buying opportunity, offering potential capital returns and a healthy yield.Despite its strong performance since 2014, BST's heavy tech concentration poses risks if tech stocks under-perform.   ryasick BlackRock Science and Technology Trust (NYSE:BST) is a unique closed-end fund that combines tech exposure with an attractive distribution profile. The CEF owns a large portfolio of tech names, including Nvidia (NVDA) which is BST’s largest holding, but the CEF also offers investors a strong dividend proposition through its option writing strategy. The closed-end equity fund has a profound tech-focus and therefore has considerable exposure to companies that have potential to benefit from growing AI adoption. BlackRock Science and Technology Trust is also priced at a discount to net asset value of almost 5% which I don’t believe is warranted. Dividend investors currently can get an 8.4% yield here, and the distribution plan calls for monthly payments. Data by YCharts Investment objective, fund composition, long-term returns The BlackRock Science and Technology Trust has a triple mandate: it focuses on the creation of current income as well as short-term and long term capital gains. The closed-end fund achieves its investment goals by owning a tech-slanted equity portfolio and writing call options against its equity holdings, allowing BST to capture option income that is distributed to the investors on a monthly basis. The fund's mandate also requires that the BlackRock Science and Technology Trust invests at least 80% of its net assets into U.S. and non-U.S. companies in the science and technology companies, with no limitations on market cap categories. In its strategy, BlackRock Science and Technology Trust is very similar to JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) which also owns a tech-heavy equity portfolio on which it writes call options. The main difference here is that the former is a closed-end fund while the latter is an ETF... and therefore doesn't trade at a big difference to net asset value. It should be noted that although selling covered calls against its portfolio, the BlackRock Science and Technology Trust does not use any debt as leverage. The biggest holding for the BlackRock Science and Technology Trust, as of the end of August, is Nvidia, which represents a massive 13.60% of the CEF’s investment portfolio. The CEF manages approximately $1.3B, and its net assets are mostly (87%) invested in U.S. companies. The portfolio split shows that besides Nvidia, the fund overweight other Mag-7 stocks like Microsoft (MSFT), Apple (AAPL), Amazon (AMZN) and Meta Platforms (META), while also investing heavily in Broadcom... a highly promising AI hardware stock which I recently singled out in the AI world as a strong buy myself: A Golden Opportunity.    Author BST commenced operations almost exactly 10 years ago, in October 2014, and has since racked up an impressive performance sheet. Since inception, the CEF’s net asset value has risen 15.91% annually, on average. For context, the highly popular JPMorgan Nasdaq Equity Premium Income ETF returned 15.75%, since inception in May 2022. Therefore, the JEPQ has a much shorter performance history and still has to earn its reputation as a reliable option-enhanced ETF over the longer term. Investors that value performance consistency, may want to choose the BlackRock Science and Technology Trust even if it means they have to accept a higher expense structure: the BST has a gross expense ratio of 1.09% compared to 0.35% for the JPMorgan Nasdaq Equity Premium Income ETF. BlackRock Science and Technology Trust Opportunity to buy BST below net asset value Closed-end funds are different from ETFs, which tend to be valued close to net asset value. On the other hand, closed-end funds can trade at significant premiums (or discounts) to net asset value depending on investor expectations about a number of factors such as supply and demand of shares, market conditions, changing investor return expectations etc. In the longer term, I would expect a CEF’s share price to converge to its net asset value, however. Currently, the BlackRock Science and Technology Trust is trading at a near 5% discount to net asset value, which creates an attractive engagement opportunity for CEF investors, in my opinion. Historically, BST has traded closer to net asset value and, in the long term, BlackRock Science and Technology Trust has been able to achieve strong net asset value growth, chiefly due to its concentrated bet on the U.S. tech sector.  Data by YCharts Buying a closed-end fund below net asset value is a way for investors to potentially benefit from a higher safety margin, and a revaluation to net asset value (or potentially to a premium valuation) represents an opportunity for investors to earn even higher capital returns. The 8.4% distribution yield, which is achieved through an option writing strategy, is obviously another strong reason to own BST. Risks for BST The BlackRock Science and Technology Trust is heavily overweight tech names like Nvidia that have performed very well in the past. Therefore, investors selecting the BST for their portfolios have an over-concentration in tech stocks that may under-perform return expectations in the future. Since the BST offers investors a good amount of upside if tech stocks continue to out-perform, the BlackRock Science and Technology Trust also has considerable under-performance potential, if, as an example, tech companies were to slow their spending on AI products.  Final thoughts  BlackRock Science and Technology Trust is a strong investment choice for investors that want to combine two typically contradictory investment mandates: 1) Invest in a tech-heavy equity portfolio that over-weights Mag-7 stocks like Nvidia, Amazon or Meta Platforms, and 2) Use an option selling strategy on top of this equity exposure to generate recurring dividend income that is being distributed to shareholders on a monthly basis. I believe the BlackRock Science and Technology Trust is a well-run closed-end ETF and has an actually quite decent performance profile since the fund’s inception back in 2014. While the expense ratio could be a bit lower (in my opinion), the BlackRock Science and Technology Trust is, from a performance/NAV-growth point of view, still a strong choice for investor that want to merge the benefits of owning high-performing tech stocks with prospects for recurring distribution income.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2474408437"}