CA - BGR: A 6.14%-Yielding Energy CEF With A History Of Underperformance

2024-03-15 18:00:28 ET

Summary

• BlackRock Energy & Resources Trust invests in energy stocks and offers a current yield of 6.14%, higher than most energy index funds.
• However, the BGR closed-end fund's performance has been underwhelming compared to energy partnerships and index funds, with a 5.59% share price gain since December 2023.
• The BGR fund's strategy sacrifices upside potential for a higher yield and pays out capital gains to investors, resulting in higher yields but lower total returns.
• The stock price performance of energy companies does not always correlate with energy prices, but current energy price trends might cause their prices to surge with profits.
• The fund is fully covering its distribution and trades at an enormous discount on net asset value.

The BlackRock Energy & Resources Trust ( BGR ) is a sector-specific closed-end fund, or CEF, that is designed for those investors who want exposure to the traditional energy sector along with a high level of income. The fund manages to deliver on this promise fairly well, as its 6.14% current yield is quite a bit higher than that of most energy index funds:

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