BlackRock Fund Offers Attractive 7.7% Dividend Yield, But Long-Term Returns Questionable
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The BlackRock Enhanced International Dividend Trust (BGY) provides high income through dividends and a covered call options strategy, while investing solely in foreign stocks for international diversification.
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BGY has underperformed US markets over the past decade, but US markets appear overvalued now based on historical price-to-GDP ratios.
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BGY currently yields 7.67% and has a 12.85% discount to NAV, an attractive entry point for income investors.
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The fund's distributions have been relatively stable, although NAV has declined recently, so sustainability bears watching.
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Diversifying internationally through BGY can reduce overall portfolio risk, especially given risks in US markets like deficit spending and potential quantitative easing.