Want a Monthly Dividend That Yields 20%? BlackRock (BLK) Has a Fund for You

Asset manager BlackRock (BLK) has a fund that offers investors a monthly dividend payment that currently yields 21%.

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The BlackRock Capital Allocation Term Trust (BCAT) pays investors a monthly dividend of $0.2579 per share, giving it a massive yield of 20.91%, based on the current share price of $14.84. BlackRock says it aims to keep the dividend yield around 20%, with the payout slightly adjusted every three months.

While it might seem that the monthly dividend is too good to be true, BlackRock has been reliably running the fund since 2020. It does have a term limit, however, and expires in 2032 after 12 years, although BlackRock retains a right to make BCAT a perpetual fund.

How the BCAT Fund Works

The BCAT fund achieves its hefty dividend payment by investing in both stocks and bonds. Its top stock holdings are all growth-oriented equities and include Alphabet (GOOGL), Nvidia (NVDA), Eli Lilly (LLY) and Micron Technology (MU).

The fund also owns a number of corporate bonds with varying maturity dates. BlackRock can toggle between the stock and bond holdings, giving greater weight to one asset class depending on how the market is performing. The fund managers also run options on the holdings.

BlackRock’s Successful Approach

This approach has worked remarkably well so far and allows BCAT to provide investors with consistent monthly income in a volatile market. The BlackRock Capital Allocation Term Trust is overseen by Rick Rieder, Head of the Global Allocation Investment Team.

Rieder is responsible for managing a total of $2.4 trillion in assets at BlackRock. As for BCAT stock’s performance, it is up 4% this year, matching the year-to-date gains in the benchmark S&P 500 index. However, the fund’s real attraction is its monthly distribution.

Is BLK Stock a Buy?

BlackRock’s stock has a consensus Strong Buy rating among 10 Wall Street analysts. That rating is based on eight Buy and two Hold recommendations issued in the last three months. The average BLK price target of $1,237.40 implies 16% upside from current levels.