In the investing world, one constant remains: what goes up must eventually come down. This cyclical nature of the market is something every investor faces. As we navigate near historic highs in the current market, I’m focused on holding onto steady, reliable stocks that can weather both bull and bear cycles. One such stock that stands out to me is Black Hills Corporation (NYSE: BKH). Here’s why this high-yield utility stock is a cornerstone of my portfolio and why it could be a valuable addition to yours as well.
What Makes Black Hills Unique?
Black Hills may not be a household name like some industry behemoths. Still, this relatively small utility company, with a market capitalization of around $4 billion, plays a crucial role in the regions it serves. For comparison, NextEra Energy (NYSE: NEE), an industry giant, boasts a market cap of approximately $160 billion. Despite its smaller size, Black Hills provides an essential service to around 1.3 million customers across states including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Without the energy supplied by Black Hills, these areas would be left in the dark, underscoring the company’s importance.
Operating within a regulated market, Black Hills enjoys a monopoly in the regions it serves. This regulation requires the company to have its rates and capital spending plans approved by the government, but it also ensures that the company has a stable customer base with limited competition. This stability is part of what makes Black Hills a “tortoise” in the stock market – a steady and reliable performer, especially valuable in times of market volatility.
A Hidden Gem with a Strong Dividend History
Many investors overlook Black Hills due to its smaller size, but this is a mistake. One area where this company truly shines is in its dividend performance. While NextEra Energy has an impressive 30-year streak of annual dividend increases, Black Hills surpasses this with 54 consecutive years of dividend hikes. This achievement places the Black Hills among the elite group of Dividend Kings, a title reserved for companies with 50 or more years of consecutive dividend growth.
Consider the economic challenges of the past five decades – from the pandemic and the Great Recession to the dot-com bubble and the oil crises of the 1970s. Through all these events, Black Hills has consistently rewarded its investors with increasing dividends. This level of consistency is exactly what I want in my income portfolio, particularly when the market is trading at elevated levels.
But the story doesn’t end with dividends. Black Hills is also experiencing customer base growth that is nearly three times faster than the overall U.S. population. This expanding customer base supports the company’s potential for solid growth as it continues to invest in the infrastructure needed to meet increasing demand.
In conclusion, while the future of the market remains uncertain, holding onto reliable stocks like Black Hills can provide stability and consistent returns. Its strong dividend history and growth potential make it a standout choice for any long-term investor looking to navigate market fluctuations with confidence.