--- title: "3 Big, Tax-Free Dividends To Anchor Your Tech Gains" type: "News" locale: "en" url: "https://longbridge.com/en/news/286118264.md" description: "Investors are returning to buy mode, benefiting equity funds, particularly in tech. The BlackRock Technology and Private Equity Term Trust (BTX) has yielded a 25% return since February, with a current yield of 7.7%. To complement aggressive investments, municipal bonds are recommended for steady, tax-free income. Three municipal bond CEFs are highlighted: RiverNorth Flexible Municipal Income Fund II (7.3% yield), Neuberger Berman Municipal Fund (6.3%), and PIMCO Municipal Income Fund II (6.2%). These funds trade at discounts to NAV, making them attractive for income seekers amid market fluctuations." datetime: "2026-05-12T14:25:39.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286118264.md) - [en](https://longbridge.com/en/news/286118264.md) - [zh-HK](https://longbridge.com/zh-HK/news/286118264.md) --- # 3 Big, Tax-Free Dividends To Anchor Your Tech Gains Investors are flipping back into buy mode, which has been a boon to the equity funds—especially on the tech side. The **BlackRock Technology and Private Equity Term Trust (BTX)** is a good example. We bought this closed-end fund (CEF) in late February—the day before the Iran conflict started—and it’s already returned around 25% for us as of this writing. This monthly payer has only issued one dividend in that time! When we bought, it yielded around 9.5%. That’s down to 7.7%, as current yields move down as prices rise. Moreover, that dividend is even safer than it was when we bought, since BTX’s net asset value (NAV, or the value of its underlying portfolio) gained roughly the same amount, which is enough to cover its current yield multiple times. That’s the kind of rise we love to see in a CEF. Even better, the fund’s discount to net asset value (NAV) sits at around 15% now, roughly where it was when we bought. This tells us that our 25% return is driven solely by the fund’s portfolio of tech stocks, which were oversold back in February. The fact that its discount is still wide means we still have some upside ahead as investors bid it closed. ## These Tax-Free Dividends Let Us “Anchor” Big Tech Gains When you consider that CEFs yield 7% on average right now, you can see the power of reinvesting a gain like that, and further building your income stream. It also pays to “anchor” your more aggressive funds (like BTX) with steady, lower-volatility options—especially those that offer reliable, tax-free income backed up by state and local governments. Those would be municipal bonds—issued by states, cities, counties and other arms of government, such as school districts. These agencies use the proceeds to fund public projects, mainly infrastructure like schools, bridges and toll roads. The best way to hold municipal bonds is through CEFs. Today we’re going to take a close look at three: the **RiverNorth Flexible Municipal Income Fund II (RFMZ)**, which, yields 7.3% as I write this; the **Neuberger Berman Municipal Fund (NBH)**, which pays 6.3%; and the **PIMCO Municipal Income Fund II (PML)**, a 6.2% yielder. That’s a 6.6% average yield—far more than the average stock pays and about the same as the yield on the typical high-yield corporate-bond fund (which, of course, entails higher risk than a municipal-bond fund). It gets even better when you consider that the dividends paid by munis (and muni-bond CEFs) are tax-free for most Americans. Factor that in and your _taxable-equivalent yield_ rises significantly. For those in the highest tax bracket, for example, that 6.6% could flip to 9.7%, according to Bankrate’s taxable-equivalent yield calculator. Then there’s the safety factor: There are strict regulations in this market, and meticulous care is put into ensuring these bonds do _not_ default. This is why only about 0.1% of muni bonds do so over the long haul. More recently, that rate has been lower. We can cut our risk _even further_ by buying municipal-bond funds containing _hundreds_ of such issues. Since these funds are actively managed, we can be sure that our diversified muni-bond portfolios are analyzed by a pro, too. Another way we can hedge our downside, and build in upside potential, is to target muni-bond CEFs trading at wide discounts to NAV. Which is exactly what we get with this trio: as I write, RFMZ trades at a 9.6% discount, so we’re essentially paying 90 cents for every dollar of its assets. NBH is our next-cheapest option, at a 7% discount, followed closely by PML’s 6% markdown. Those discounts are available to us for two main reasons: 1. The move toward riskier assets (the AI trade, in other words) has drawn investor attention away from “boring” assets like munis. 2. Higher interest rates have reduced the value of older muni bonds as new ones are issued at higher rates. That’s weighed on muni-bond funds in the last few years. But at current discount levels, I see this factor as already priced in. That leaves us with a nice time to add to our muni holdings, because when the next panic inevitably arrives, it will drive up interest in high, steady, tax-favored payouts like these. The same thing will happen when rates move lower, making a 6.6%+ tax-free yield look a lot more attractive to income seekers. When either of those conditions are met, a high earner who bought today will already be sitting pretty, having collected their 9.7% taxable equivalent yield and getting set for their capital gains accrue as their muni-bond funds’ discounts start to disappear. _Michael Foster is the Lead Research Analyst for_ Contrarian Outlook_. For more great retirement income ideas, click here for our latest report “_Indestructible Income: 5 Bargain Funds with Steady 10% Dividends.**”** ### Related Stocks - [BTX.US](https://longbridge.com/en/quote/BTX.US.md) - [RFMZ.US](https://longbridge.com/en/quote/RFMZ.US.md) - [PML.US](https://longbridge.com/en/quote/PML.US.md) - [NBH.US](https://longbridge.com/en/quote/NBH.US.md) - [BIT.RT*.US](https://longbridge.com/en/quote/BIT.RT*.US.md) - [BDJ.US](https://longbridge.com/en/quote/BDJ.US.md) - [BSTZ.US](https://longbridge.com/en/quote/BSTZ.US.md) - [BLK.US](https://longbridge.com/en/quote/BLK.US.md) - [BIT.RT.US](https://longbridge.com/en/quote/BIT.RT.US.md) ## Related News & Research - [Massive Put Options Trading in Bank of NY Mellon - Out-of-the-Money 3.33% Yield](https://longbridge.com/en/news/296256958.md) - [As 30-Year Yields Spike to 5.31%, Our Top Chart Strategist Warns There’s a Risk to Stocks: ‘In a Word, Yes’](https://longbridge.com/en/news/296153828.md) - [Dataproces signs German municipal contract for school development plan consulting](https://longbridge.com/en/news/296220126.md) - [EXPLAINER-Treasury yields are rising - why does it matter?](https://longbridge.com/en/news/296262608.md) - [The S&P 500 Has a 5% Problem And It Could Decide What Happens Next](https://longbridge.com/en/news/296236858.md)