BlackRock Health Sciences Trust IINYSE: BMEZ

BlackRock raised dividends for BMEZ, offering a monthly distribution of $0.1789 with a 14.24% yield, showing confidence in the fund's future. BMEZ shares have been bought back multiple times in 2024, indicating strong tailwinds for the fund's stock price. BMEZ is a buy with high-yield and unique sector diversification in the biotechnology industry, expected to rebound significantly in 2024.

BlackRock Health Sciences Term Trust has seen its discount narrow somewhat since our last update, but it remains attractive still. BMEZ utilizes a covered call writing strategy and also provides some private investments to help deliver performance. The biotech space has performed rather poorly in the last several years but 2024 seems to be a bit more promising.

The Healthcare sector has trailed the Tech-heavy S&P 500 in the past 10 years, but has recently seen a boost in performance. BlackRock Health Sciences Term Trust and BlackRock Health Sciences Trust are two funds that invest in the healthcare sector. BMEZ focuses on "cutting edge" health sciences stocks, while BME focuses on large cap healthcare names.

Equity and fixed-income markets had another strong month in December, driven by continuing retreating risk-free Treasury rates. We even saw an improvement in the breadth of the overall market, with broader participation lifting some of the beaten-down sectors for the year. That said, closed-end fund discounts remain historically wide, and that continues to drive opportunity in the CEF wrapper.

BlackRock Health Sciences Term Trust is trading at a deep discount and has struggled due to the poor performance of the biotech healthcare sector. The fund's new distribution policy aims to retain assets when times are lean and reward shareholders when things are going well. BMEZ has a focus on private investments, which adds to its risk profile but also presents potential growth opportunities.

BlackRock Health Sciences Term Trust is a closed-end fund focused on healthcare and biotech stocks with $1.69 billion under management. The fund employs a call-writing overlay and invests in venture-stage companies to try and generate outperformance. The fund trades at an attractive 17.52% discount to NAV and has the potential for a 2.6% tailwind per annum.

We review CEF market valuation and performance through the third week of October and highlight recent market action. All CEF sector NAVs were down on the week, while only three sectors managed to tighten. Investor should not take CEF performance against benchmarks at face value.

BlackRock Health Sciences Term Trust announced a distribution cut, and this unique CEF now trades at an unusually large discount to NAV. With inception just before the pandemic, BMEZ had no price gains to support the distribution when the market fell, thus was forced into an ROC trap and then distribution rightsizing. BMEZ is a "Term" Trust that will dissolve in 2032, thereby giving investors a liquidity event at NAV (if you buy at a discount, you'll be made whole at "maturity").

This month I added to three of my already existing positions to grow my income. I'm continuing to avoid adding too much in terms of leveraged funds to deleverage my overall portfolio, and letting some cash build-up has a similar effect. The market overall is continuing to remain resilient despite another 25-basis point Fed hike and broader participation to the upside continued for a second month.