BlackRock Energy and Resources Income Trust Reports 26.7% NAV Growth, Boosts Dividend by 46.7% to 1.65p Per Share

Investment Approach Across Mining, Traditional Energy, and Energy Transition Sectors

Established on 13 December 2005, BlackRock Energy and Resources Income Trust plc operates as a closed-ended investment company offering diversified exposure to the energy and commodities sectors. Its flexible three-sector investment strategy enables allocation across mining companies, traditional energy producers and services, and energy transition businesses. This approach aligns with the board’s view that the evolving global energy landscape necessitates balanced exposure to conventional energy, renewables, and mining operations supplying critical raw materials.

As of 31 May 2026, the portfolio was tactically positioned with 37.1% in mining, 30.3% in traditional energy, and 32.6% in energy transition. The trust’s blended reference index comprises the MSCI ACWI Select Metals & Mining Producers Ex Gold and Silver Index (40%), MSCI World Energy Index (30%), and S&P Global Clean Energy Transition Index (30%). This composite benchmark reflects the trust’s dual focus on dividend income and long-term capital growth, acknowledging that dividend targets extend beyond typical sector indices.

Dividend Raised to 1.65p Per Share Under New Policy

Effective 1 December 2025, the board implemented a new dividend policy targeting an annual payment equal to the greater of the prior year’s total dividend or 4% of the previous year-end NAV per share. Quarterly dividends increased to 1.65 pence from 1.125 pence year-on-year, a 46.7% rise. For the financial year ending 30 November 2026, the trust aims for a total dividend of 6.60 pence per share, payable quarterly. This equates to a yield of 3.3% based on the 31 May 2026 share price of 199.00 pence, and 3.9% based on the closing price on 20 July 2026.

Robust accumulated revenue and distributable reserves provide the trust with flexibility to sustain this dividend target. Dividends will primarily be funded from portfolio income and revenue reserves, with distributable reserves as a potential supplement. The investment managers may also write options to enhance income, but only when aligned with total return objectives rather than solely to meet income targets. The board emphasized that the dividend target is not a profit forecast but reflects the trust’s capacity to balance income generation with capital growth within its closed-ended structure.

Net Assets and Share Price Outperform NAV Amid Market Volatility

Net assets rose 13.3% to A3207.1 million as of 31 May 2026 from A3182.8 million at 30 November 2025. NAV per share increased 24.7% to 204.93 pence, while the share price gained 32.7% to 199.00 pence. The share price outperformance relative to NAV resulted from the discount to NAV narrowing from 8.7% to 2.9%, outperforming the closed-end fund sector average discount of 11.2% and the AIC Commodities and Natural Resources peer group average of 6.0%.

These results were achieved amid significant geopolitical disruptions, including Middle East military conflicts causing energy supply shocks. To maintain a tight discount range, the board repurchased 10.19 million shares for A318.0 million during the period, and an additional 975,800 shares for A31.76 million post-period through 20 July 2026. The board noted a modest recent discount widening linked to commodity and energy stock price pullbacks and US Dollar strength versus sterling, committing to ongoing discount management through repurchases and issuances where beneficial.

Six-Month Returns Lag Benchmark Despite Strong Absolute Gains

For the six months ended 31 May 2026, the trust’s NAV per share rose 26.7% and share price increased 34.9% on a total return basis with dividends reinvested, trailing the blended reference index’s 36.8% return in sterling terms. Over three years, the trust outperformed with an 84.8% NAV return versus 59.9% for the benchmark, a 24.9 percentage point advantage. Over five years, NAV returned 143.0% compared to the index’s 91.5%, outperforming by 51.5 percentage points.

The board attributed six-month underperformance primarily to an underweight position in Bloom Energy, which comprises 4% of the benchmark and whose shares more than doubled following a Master Services Agreement with Oracle for a multi-gigawatt AI data centre in New Mexico. Revenue earnings per share remained steady at 2.00 pence year-on-year. As of 20 July 2026, NAV per share declined 11.6%, closely tracking the reference index’s 11.5% drop, with detractors mainly from mining holdings like Abaxx Technologies and solar-related energy transition stocks.

Portfolio Shaped by Geopolitical Energy Disruptions and AI Infrastructure Investment

Investment managers highlighted two key themes influencing market and portfolio performance: geopolitical disruption to energy supplies caused by Middle East conflict and unprecedented capital expenditure on AI data centre infrastructure. Since late February 2026, military tensions led to closure of the Strait of Hormuz, reducing seaborne oil exports by about 11 million barrels per day—roughly 10% of global supply—the largest disruption since World War II. This caused oil prices to exceed US$100 per barrel and sharp increases in diesel and jet fuel prices.

Concurrently, major US hyperscalers are expected to invest around US$800 billion in AI data centre infrastructure in 2026, about ten times the annual capital expenditure of the top 20 global mining companies. This AI-driven demand boosts electricity generation, grid equipment, and power cable sectors. These dual trends have created opportunities across the trust’s three sectors, with energy transition firms benefiting from grid upgrades and traditional energy companies profiting from higher oil prices and offshore asset investments.

Mining Sector Exposure Moderated Amid Strong Performance

Base metals prices strengthened due to structural demand from grid investments, renewable energy deployment, and critical raw material supply chain initiatives. Copper prices rose notably amid constrained supply and Middle East logistics disruptions. As of 31 May 2026, mining exposure was adjusted to 37.1%, down from a prior overweight stance. Prices for aluminium increased 27.7% to US$3,628 per tonne, copper rose 20.2% to US$13,503, nickel climbed 25.1% to US$18,304, and tin surged 32.9% to US$52,215 per tonne.

Investors favored mining companies perceived as resilient to technological disruption and macroeconomic uncertainty. The managers prudently trimmed mining exposure following strong returns, reducing the overweight position before a March decline in mining and energy transition stocks. The trust retained holdings with disciplined capital allocation, quality assets, and experienced management poised to benefit from electrification and renewable energy demand.

Energy Transition Sector Benefits from Grid Modernisation and Electrification

Energy transition investments were among the top contributors to performance, especially companies involved in electricity generation and grid upgrades. Prysmian, a power cable manufacturer, reported strong order backlogs and profit margins exceeding 20%, surpassing its two-year outlook. Suppliers of grid and power generation equipment benefited from AI data centre construction and ongoing electrification trends such as increased air conditioning, electric vehicle adoption, and manufacturing reshoring.

Renewable energy firms Sungrow Power and Grenergy Renovables delivered positive returns amid rising global electricity demand. Siemens Energy exceeded earnings expectations with increased gas turbine orders, benefiting from traditional energy and grid modernisation. Solar semiconductor producer 5N Plus posted earnings growth driven by domestic renewables investment. By period end, energy transition exposure stood at 32.6%, down from earlier overweight levels, with selective holdings maintained due to attractive valuations and structural growth prospects.

Traditional Energy Sector Weighting Increased Through Oilfield Services

Exposure to traditional energy rose significantly during the period, shifting from underweight to modest overweight at 30.3% of assets. This reflected expectations that oil and gas investments will pivot toward international assets amid supply risks. Subsea 7, an international oilfield services company, expanded its order backlog and benefited from offshore production investments. TechnipFMC also gained from industrial tailwinds supporting oilfield services demand.

US refiner Valero Energy saw consensus earnings estimates more than double since early 2026 due to expanded refined product margins following the Strait of Hormuz closure. Commodity prices reflected supply disruptions: West Texas Intermediate oil rose 55.6% to US$91 per barrel, Brent oil increased 45.5% to US$92, diesel climbed 49.0% to US$978 per metric tonne, and jet fuel advanced 54.7% to US$1,116. Managers anticipate eventual resumption of Middle East exports, prompting tactical reduction in conventional energy exposure with proceeds reallocated to select energy transition companies.

99.79% Shareholder Support Confirms Continuation and Strategy

At the Annual General Meeting on 25 March 2026, resolution 11 to continue the trust as an investment company received overwhelming approval with 99.79% of votes in favor. The board views this strong endorsement as a clear mandate for the current three-sector investment strategy spanning mining, traditional energy, and energy transition sectors. The continuation vote is a formal governance mechanism requiring periodic shareholder approval to sustain operations under existing strategic parameters.

This decisive support reinforces the board’s confidence in navigating volatile markets and capitalizing on long-term trends such as energy security, AI infrastructure development, and critical raw material demand. The trust’s flexible mandate allows portfolio managers to adapt to market conditions and pursue optimal opportunities across the energy complex.

Outlook Highlights Energy Security and Materials-Driven Growth

The board identified key structural drivers expected to underpin long-term returns across the trust’s sectors. Increasing global emphasis on energy security and independence is spurring investments in both conventional and renewable energy assets. Simultaneously, the economy is undergoing a materials-intensive transformation fueled by AI infrastructure deployment, electrification of transport and heating, and expanded renewable energy and battery storage use. These overlapping trends are anticipated to sustain demand for materials and energy across mining, traditional energy, and energy transition sectors.

Current valuations offer attractive entry points, with mining and traditional energy equities trading at relatively low levels compared to other sectors and historical ranges. Energy transition investments present growth potential with more reasonable valuations than earlier in the year. The board stressed that diversified positioning across all three sectors provides resilience through market cycles, enabling the trust to benefit from energy security priorities while capturing electrification and renewable energy growth. Management remains confident in delivering both dividend income and capital appreciation from these long-term trends.