Are BSTZ’s 11% Dividends A Good Choice For Retirees?

Baby Boomers are the biggest retiree US demographic within retiree history. Roughly 4 million Americans will turn 65 by 2027, with the total born roughly numbering 73 million. As a result, their investment preferences and demands dictate the direction and types of many of the product offerings that the financial industry markets, especially when it comes to income.

While certain Exchange Traded Funds, Mutual Funds, and Closed End Funds all vie for market share, BlackRock is the asset management 800 lb. gorilla. With over $15 trillion under management, its various Closed End Funds are capable of strategic moves that would be unfeasible for smaller firms. One such example is The BlackRock Science and Technology Term Trust (NYSE: BSTZ). 

Private Equity Tech Investing For Individual Investors 

BSTZ affords its shareholders portfolio exposure to popular private tech company securities,

Originally marketed as a technology CEF with a hefty dividend component at its 2019 inception, BSTZ has altered its strategy, due to the accelerated developments in the technology sector, especially in Artificial Intelligence (A.I.). Thanks to BlackRock’s deep pockets, BSTZ has become what is essentially a de facto private equity technology fund that maintains a nearly 12% yield, yet also boasts the liquidity and trading ease of a NYSE listed security. This makes BSTZ the only one of its kind on the market, since few rivals have the financial muscle of BlackRock to satisfy SEC concerns over the risks of private equity-type investing in many pre-revenue companies that may never develop to the stage of having a viable commercial product or service. 

A thumbnail overview of BSTZ appears thus, based at market price at the time of this writing:

The source of BSTZ’s dividends comes from a covered call option strategy written against the 30-40% of the portfolio that comprises publicly traded technology stocks, such as Nvidia and Spotify. The rest of the portfolio holds various sized positions in privately held technology companies, such as Databricks, Klarna, and Bytedance, among others. The fund’s 10 latest holdings as of the start of September are:

• Project Debussy (Databricks): 13.88%
• Nvidia: 10.05%
• Project Picasso (PsiQuantum): 6.42%
• Astera Labs: 2.30%
• Klarna Group PLC: 2.25% (pre-IPO)
• Project Bond (undefined private company): 2.23%
• Spotify Technology: 2.18%
• Project Gaugamela (unidentified venture stage company): 2.15%
• Snowflake, Inc.: 2.09%
• Credo Technology Group: 2.07%

Boomer Appeal and Turn-Offs

11,79% yield in dividends is arguably BSTZ’s biggest appeal to retirees, although it may not be suitably for people of all life demographics.

BSTZ has developed a sizable following within the ranks of Gen-Z investors, thanks to its cutting edge technology sector exposure. High dividends and steady growth are two other factors driving its popularity, since dividend compounding has become a Gen-Z wealth building strategy of choice after getting a taste of the bear market during April of this year when President Trump announced his reciprocal tariff strategy.  Whether those elements’ appeal to Baby Boomers remains to be seen.

Technology:

The Baby Boomer generation has lived through an incredible period of technological breakthroughs. Although born during the development of television and stereo sound, they have experienced and observed the path of computers, from huge, room sized monstrosities that required stacks of punch cards, to input data to units that fit in the palm of one’s hand, and to the genesis and commercialization of A.I., something only relegated to science-fiction less than a few years ago. That said, the Baby Boomer range of exposure to the latest technology runs the gamut from Luddite to Digital Wizard. Correspondingly, the demographic appeal of a BSTZ with a cutting edge tech portfolio will be strong with the latter but weak with the former. 

Growth:

While growth is certainly a desired aspect from investor demographics across the board, steady growth is a much higher demand aspect among retirees than volatile growth. The Baby Boomer investors have survived the late 1990s dotcom bubble, the 2008 subprime mortgage bank meltdown, and the 9% plus inflation of Bidenomics. In retirement, the angst from excess tech stock volatility is not worth the chance of high gains versus the better odds from smaller but steadier ones.

Income:

From inception, BSTZ has unfailingly delivered its annual dividend of $12.20 in monthly distributions. At a yield of 11.79%, this competes on an income level with REITs and BDCs, two other industrial sectors favored by income focused retirees for their accounts. This high reliable consistency and its BlackRock name imprimatur of safety score big points with retirees. 

The one caveat to BSTZ is that it was conceived with a built in 12-year termination date of June 25, 2031. That could be a deal breaker for some retiree investors, although it depends on the investor in question’s level of market experience. The 2031 expiration is subject to extension with an option to perpetuity. This is not unlike the scenario of callable municipal bonds, which run a risk of early redemption by the issuer. 

In retrospect, BSTZ can be a solid choice for retirees, albeit ones who clearly understand the pros and cons of investment in a technology fund. The high dividend is an incentive but should not be viewed solely with such a narrow lens, as there are more elements and nuances to it.