Dividend Kings In Focus: Black Hills Corporation

Companies that have at least 50 years of dividend growth are considered Dividend Kings. Dividend growth investors won’t be surprised to find mega-cap stocks like Procter & Gamble (PG) and Coca-Cola (KO) among the Dividend Kings.

But there are also a number of small-cap and mid-cap Dividend Kings. For example, Black Hills Corporation (BKH) is the newest member of the Dividend Kings list, even though it has a market cap of just under $4 billion. This shows that smaller companies can maintain equally impressive streaks of dividend growth.

This article will discuss Black Hills’ business, growth prospects, and valuation in order to determine if shares are worth purchasing now.

Business Overview

Black Hills Corporation is an electric utility that provides electricity and natural gas to customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Black Hills was founded in 1941, and the company is headquartered in Rapid City, South Dakota.

The company has over 1.2 million utility customers in 8 states. Its natural gas assets include 46,000 miles of natural gas lines. Separately, it has 9,000 miles of electric lines and 1.4 gigawatts of electric generation capacity.

Source: Investor Presentation

Utility stocks are typically purchased for their stable profits and low volatility. Black Hills is no exception, as 92% of its assets are regulated. It is also a diversified business, split between complementary natural gas and electric utility businesses.

Black Hills Corporation reported its third-quarter earnings results on November 2nd. The company generated revenues of $350 million during the quarter, a 7% year-over-year increase. Earnings-per-share of $0.58 during the third quarter exceeded the consensus analyst estimate of $0.50 and grew 32% year-over-year. The company’s results showed the resilience of its business model.

Management guidance calls for earnings-per-share at ~$3.65 this year, which would represent a small increase in its profits versus fiscal 2019.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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