BDJ: 9% Income, 8% Discount, And Lower Volatility

2025-01-05 08:00:00 ET

Summary

• The BlackRock Enhanced Equity Dividend Fund is a closed-end fund that invests in the equity of large-cap, dividend-paying stocks, mostly from the Russell-1000 Value index. The number of positions is usually limited to around 100.
• It also utilizes an options writing strategy on the underlying individual holdings to lower volatility and enhance income.
• BDJ offers a high-income yield of almost 9% after its recent distribution increase and a moderately high discount of roughly 8%.

Introduction

The BlackRock Enhanced Equity Dividend Fund (BDJ) was incepted in August 2005. So, in that sense, the fund has a long history of nearly 20 years. The fund invests in a portfolio of U.S. based equity stocks of large companies that have high potential for dividend growth. The fund also utilizes a call options (write/sell) strategy on roughly 50% of its underlying portfolio. It writes call options on the individual holdings rather than any index....

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