BGT - BGT: A Very Good Floater CEF That Should Perform Well For Longer Than Market Thinks

2024-02-22 17:54:46 ET

Summary

• The BlackRock Floating Rate Income Trust Fund offers an attractive current yield of 11.26%, which is in line with its peers.
• The BGT closed-end fund has outperformed major bond indices and even the S&P 500 over the past three years.
• The fund primarily invests in below-investment-grade floating-rate debt securities, which may carry higher risk but also higher yields.
• The fund is fully covering its distribution with net investment income, and rates may remain high for an extended period so it should be sustainable.
• BGT is currently trading at a slight premium, but the shares deserve a buy rating if they swing to a discount on net asset value.

The BlackRock Floating Rate Income Trust Fund ( BGT ) is a closed-end fund, or a CEF, that income-focused investors can purchase in order to achieve their goals. As is the case with most floating-rate funds, the yield on this one is quite attractive right now. For example, here is how the BlackRock Floating Rate Income Trust’s 11.26% current yield compares to some other options:

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