Dividend Reset = Opportunity to Grab This 9.2% Yield at a Discount

Key Points

• BlackRock's BlackRock Health Sciences Term Trust (BMEZ) still offers a significant yield of 9.2% despite a recent dividend cut.
• The fund is currently trading at an 11% discount to its net asset value (NAV), creating a potential buying opportunity for investors.
• Management at BlackRock is actively buying back shares, indicating confidence in the fund's future performance.
• BMEZ's portfolio primarily includes biotech and medical device firms that could benefit from less regulation under the current administration, positioning it well for growth.

Most Wall Street “suits” are allergic to dividend cuts. These spreadsheet jockeys sooooo lack imagination. They prefer linear trends—up and to the right.

Dividend growers model nicely. Payout “resets” (cuts!) do not. So, there is often a knee-jerk reaction from analysts to sell every divvie slash they see.

Same goes for most individual income investors. These vanilla beans sold BlackRock Health Sciences Term Trust (BMEZ) late last week when BlackRock sliced the dividends for three of its popular funds.

The weaker hands sold. Big payouts remain. As contrarians, we’re intrigued.

Dividend cuts, ironically, often mark the start of opportunity. Here’s what the knee-jerk sellers miss:

• Even after the trim, BMEZ still yields 9.2%.
• The fund trades at an 11% discount to its net asset value (NAV)—a generous “free money” cushion.
• BlackRock itself has been buying back shares when the discount widens, a confident signal from management—and rare shareholder friendly move from a closed-end fund (CEF)!

In other words, the “bad news” is already priced in. This nifty 9.2% monthly dividend can now be had for 89 cents on the dollar.

Why the deal? Because this is a CEF. Unlike ETFs or mutual funds, CEFs raise a fixed pool of capital at launch. After that, shares just trade back and forth on the exchange.

That creates inefficiencies—often big ones. When investors sell (like last week), they often dump CEF shares without looking at the underlying assets. Discounts widen, even if the portfolio is perfectly fine.

That’s when dividend deal hunters like us step in!

CEF discounts open the door. Politics blow it off the hinge. Wall Street is worried about President Trump letting RFK Jr. “go wild on health” from his perch at HHS. The first-level fear is that pressure on drug prices is bearish for healthcare.

But remember Trump 1.0: big pharma lagged, while biotech and medical device makers soared. BMEZ’s portfolio today is a blend of biotech and medical device makers with big potential. These aren’t cartel-like insurers or big pharma names whose product prices the government may cap.

BMEZ holds the kinds of firms that benefited the most in Trump 1.0: healthcare innovators that thrive when regulation lightens.

Top holding Alnylam (ALNY) is a pioneer in “RNA interference”—a cutting-edge class of medicine that essentially turns off disease-causing genes. Alnylam’s therapeutics are being explored for treating genetic, heart and neurological diseases.

Bad genes? Alnylam fixes them.

The company’s research benefits from less regulation. The stock soared under Trump 1.0, racking up 300%+ gains. And the sequel is shaping up to be even bigger with ALNY already up 90%:

BMEZ Top Holding Loves the Trump Life

Number two BMEZ holding, Veeva Systems (VEEV), gained a fantastic 570% under Trump 1.0. The life sciences software and data provider benefits from a looser healthcare mergers and acquisitions environment because Veeva’s existing customers install Veeva’s platforms on newly-acquired corporate laptops.

VEEV shares lost 4% in Biden’s four years as sector M&A slowed, but they are already up 29% as the healthcare deals begin to flow.

ALNY and VEEV are increasingly hot tickers, and deservedly so. But they are hidden beneath the cloak of BMEZ! The discount to NAV means we’re paying less than 90 cents on the dollar for this duo.

Dexcom (DXCM), is the fund’s number three holding. It makes continuous glucose monitors that are quickly replacing old-school finger sticks for diabetes management. Its stock climbed 354% under Trump 1.0.

Let’s put the dividend reset in perspective. We are moving from a variable monthly overpayment to a consistent 11 cents per month. BlackRock is like a carpenter. Management measured twice so that they can cut just once and leave the payout at these levels for the foreseeable future:

BlackRock Measures Twice, Cuts Once

So we have a 9.2% divvie supported by the current administration’s policies. With an 11% discount to boot! The vanilla sellers may regret dumping this well-supported monthly dividend.

If this monthly dividend discussion sparked an “ah ha!” moment for you, well, welcome! Wall Street has been feeding you the equivalent of “junk food” financial advice your entire life.

The 4% withdrawal rule? C’mon man! BMEZ yields 9.2% which is enough to live on dividends without tapping our principal.

Plus, it trades at an 11% discount—which means upside is likely! What a cherry deal.

None of the vanilla maxims generate passive income. It’s time to clean up the financial diet. Trim down the “buy and hope” desperation and beef up the dividends.

This is the safe, simple way to lock in monthly dividends that add up to 9% or more per year. Click here for my full September 2025 briefing on monthly dividends.