BlackRock Announces Increased Distribution Rates for Certain Municipal Closed-End Funds
BlackRock announced increased distribution rates for its MuniYield Pennsylvania Quality Fund (NYSE: MPA) and California Municipal Income Trust (NYSE: BFZ). The MPA fund's distribution rate will rise by 38% to $0.066 per share, while BFZ will see a 16% increase to $0.059 per share. The declaration date for these changes is May 20, 2024, with an ex-date and record date of June 14, 2024, and payments will be made on July 1, 2024. These changes aim to provide long-term value to shareholders.
- MPA distribution rate increased by 38% to $0.066 per share.
- BFZ distribution rate increased by 16% to $0.059 per share.
- BlackRock aims to deliver long-term value and enhance returns for shareholders.
- A portion of the distribution may be a return of capital, which does not reflect true investment performance.
- Distributions exceeding total return performance can reduce the Fund’s net asset value.
- Shareholders should not draw conclusions about the Fund’s investment performance solely from the distribution amount.
Insights
BlackRock's announcement about increased distribution rates for two of its municipal closed-end funds can be interpreted as a positive signal for current shareholders and potential investors. Municipal closed-end funds, like the BlackRock MuniYield Pennsylvania Quality Fund and the BlackRock California Municipal Income Trust, are often favored by investors seeking tax-exempt income.
The increase in distribution rates—
However, investors should be cautious about the nature of these distributions. The announcement mentions that a portion of the distribution may be a return of capital, a method where the fund returns part of the investor's original investment rather than earnings. This can sometimes mask lower effective yields and artificially sustain high distribution rates.
The key drivers of these funds' ability to maintain or increase distributions will be interest rate movements, the performance of underlying investments and general market conditions. Given the volatile interest rate environment, investors should closely monitor how these funds adapt their strategies.
The increased distribution rates for BlackRock's municipal closed-end funds come at an interesting time. Municipal bonds are often seen as a safe haven, especially for investors in higher tax brackets due to their tax-exempt status. This announcement might be indicative of BlackRock's strategic positioning to attract more investors into these funds by offering more competitive yields.
Being state-specific funds, MPA and BFZ are tailored for investors residing in Pennsylvania and California, respectively. Investors in these states can benefit from double tax exemption (federal and state), which is especially appealing in high tax states like California.
It's important to note that the performance and appeal of these funds are closely tied to the fiscal health of the issuing municipalities and the overall municipal bond market. Any significant shifts in state policies or economic conditions could impact these funds' performance and distribution rates.
Given the current market uncertainties and potential for interest rate changes, these distribution rate increases may attract investors looking for stable income, but they should remain vigilant about the underlying risks.
“We have taken this step to support shareholders of these Funds, consistent with our goal of delivering long-term value. We are focused on enhancing returns for our closed-end fund shareholders and helping them plan for their financial futures,” said R. Glenn Hubbard, Chair of the Board of BlackRock Closed-End Funds.
Each Fund’s monthly distribution rate for June 2024 can be found below:
Municipal Funds:
June 2024 Distribution:
Declaration: 5/20/2024 Ex-Date: 6/14/2024 Record: 6/14/2024 Payable: 7/1/2024
State-Specific Funds |
Ticker |
Distribution |
Change From Prior Distribution |
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MPA |
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+ |
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BFZ |
|
+ |
*In order to comply with the requirements of Section 19 of the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund noted above posted to the DTC bulletin board and sent to its shareholders of record as of the applicable record date a Section 19 notice with the previous distribution payment. The Section 19 notice was provided for informational purposes only and not for tax reporting purposes. This information can be found in the “Closed-End Funds” section of www.blackrock.com. As applicable, the final determination of the source and tax characteristics of all distributions in 2024 will be made after the end of the year.
Each Fund’s ability to maintain its declared distribution amount will depend on a number of factors, such as the amount and stability of investment income earned by the Fund, its asset mix, portfolio turnover, performance of its investments, level of retained earnings, the amount of leverage utilized by the Fund and the effects thereof, the costs of such leverage, the movement of interest rates for municipal bonds and general market conditions.
Shareholders should not draw any conclusions about a Fund’s investment performance from the amount of the Fund’s current distribution or from the terms of the Fund’s dividend policy. A portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment is paid back to the shareholder. A return of capital distribution does not necessarily reflect a Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ When distributions exceed total return performance, the difference will reduce the Fund’s net asset value.
About BlackRock
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit www.blackrock.com/corporate
Availability of Fund Updates
BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this release.
Forward-Looking Statements
This press release, and other statements that BlackRock or a Fund may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to a Fund’s or BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
With respect to the Funds, the following factors, among others, could cause actual events to differ materially from forward-looking statements or historical performance: (1) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the Funds or in a Fund’s net asset value; (2) the relative and absolute investment performance of a Fund and its investments; (3) the impact of increased competition; (4) the unfavorable resolution of any legal proceedings; (5) the extent and timing of any distributions or share repurchases; (6) the impact, extent and timing of technological changes; (7) the impact of legislative and regulatory actions and reforms, and regulatory, supervisory or enforcement actions of government agencies relating to a Fund or BlackRock, as applicable; (8) terrorist activities, international hostilities, health epidemics and/or pandemics and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (9) BlackRock’s ability to attract and retain highly talented professionals; (10) the impact of BlackRock electing to provide support to its products from time to time; and (11) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.
Annual and Semi-Annual Reports and other regulatory filings of the Funds with the Securities and Exchange Commission (“SEC”) are accessible on the SEC's website at www.sec.gov and on BlackRock’s website at www.blackrock.com, and may discuss these or other factors that affect the Funds. The information contained on BlackRock’s website is not a part of this press release.
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Source: BlackRock Closed-End Funds
FAQ
What is the new distribution rate for MPA as of June 2024?
How much has the MPA distribution rate increased?
When will the new distribution rates for MPA be payable?
What is the ex-date and record date for MPA's new distribution rate?
Why did BlackRock increase the distribution rates for MPA?
Does the increased distribution rate indicate better investment performance for MPA?
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