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The BlackRock Science and Technology Term Trust (NYSE:BSTZ) is an unusual tech vehicle: a closed-end fund with a 2031 liquidation date, an expense ratio near 1.4%, and over 30% of its portfolio invested in private, pre-IPO companies. Income investors are drawn to the roughly 8% yield, but the structure under the hood is doing more work than the dividend headline suggests.
Where the Yield Actually Comes From
BSTZ manufactures its distribution rather than collecting it. Tech names like NVIDIA and AppLovin pay little or nothing, so the fund builds income through three channels: covered calls written against public holdings such as NVIDIA and Lumentum, securities lending (the fund reported $169,184 in net lending income with an average of $15.9 million on loan), and realized gains, including a return of capital when the first two fall short.
That last point matters. BlackRock runs a managed distribution plan, meaning the monthly check is set at a target level and topped up with return of capital whenever income and gains do not cover it. Investors are sometimes being paid back with their own NAV.
The Private Holdings Problem
The largest private position is Databricks, and the venture sleeve drives both the upside thesis and the safety risk. Pre-IPO holdings cannot be marked daily on a screen, cannot be lent out, and cannot have calls written against them. They are dead weight for the income engine, even if they are alive on the appreciation side.
That is why the distribution has wandered so much. Per-share payouts have ranged from $0.10 in 2024 to around $0.22 in mid-2025.
That volatility culminated in a $0.517116 special payment on December 22, 2025 that looks like a year-end return of capital. The fund has since settled at $0.1625 monthly through April 2026, and a 0.2% cut announced March 26, 2026 reinforced the downward trend.
The 2031 Wind-Down Changes the Math
Term trusts are designed to expire. By 2031, BlackRock has to monetize that illiquid venture book at whatever the market will pay, which is the central risk for anyone counting on this distribution to be both stable and backed by real value. Saba Capital disclosed an 8% stake worth roughly $93.8 million in March 2026, an activist move that typically pressures funds to address persistent NAV discounts. BSTZ trades at roughly an 11% discount to NAV, which is upside if the fund liquidates near NAV and a warning about how the market is pricing the private book.
Performance vs. the Benchmark
Total return has been strong. BSTZ is up about 68% over the past year, well ahead of the roughly 40% gain in the NASDAQ 100 (QQQ). Shares trade near $27, up from a 52-week low of around $15. Five-year price-only return is only about 17%, a reminder that distributions have done most of the heavy lifting for long-term holders.
Who BSTZ Actually Fits
The dividend behaves unlike a utility’s. It is a target payout supported by options premiums, lending fees, and periodic return of capital, layered on a portfolio that gets harder to value as 2031 approaches. The headline yield will likely keep arriving on schedule, but expect more cuts, more capital returned, and tax statements that will surprise investors who assumed this was ordinary income.
BSTZ makes sense for investors who want venture and AI exposure with a monthly check and accept they are buying a wind-down vehicle. Income purists looking for a durable yield should look elsewhere.