BTZ: Multi-Sector Bond Fund Paying A 6.91% Yield

Seeking AlphaClosed End FundsBTZ: Multi-Sector Bond Fund Paying A 6.91% YieldNov. 23, 2020 11:44 PM ET|| About: BlackRock Credit Allocation Income Trust IV (BTZ), Includes: C, JPM, LQD, VZby: Nick AckermanNick Ackerman CEF/ETF Income LaboratoryCEF/ETF income and arbitrage strategies, 8%+ portfolio yieldsSummaryBTZ's distribution coverage has dipped in the last report, but isn't cause for too much concern at this time.
The fund is a multisector bond fund, invested mostly in investment-grade holdings.
Diversification across credit quality, sectors, and maturities should mean BTZ is limited to sector-specific risks.
Written by Nick Ackerman, co-produced by Stanford Chemist
BlackRock Credit Allocation Income Trust (NYSE: BTZ) has been providing a monthly income for investors since 2006 when the fund launched. As we know, investments launching around this time had unfortunate timing due to the 2008/09's market turbulence. Since then, the fund has remained quite steady and is putting up healthy returns for a fixed-income fund.
The dividend was fully covered according to their last Semi-Annual Report. However, the last 3-month coverage has dropped a bit. The discount is quite attractive, and combining that with the higher coverage we typically see can make BTZ compelling at this time.
At the CEF/ETF Income Laboratory, we hold BTZ in our Tactical Income - 100 portfolio. This portfolio is designed to take advantage of special situations and can lean more aggressive. So, at first, it might seem strange that such a steady fund is put in this portfolio. However, it goes back to last year when Stanford Chemist sent out a trade alert. This move put BTZ in our TI portfolio to take advantage of the fund's tender offer.
BTZ invests with an objective to "provide current income, current gains, and capital appreciation." They intend to achieve this through investing "...under normal market conditions, at least 80% of its assets in credit-related securities,... Read more