On the 01 September 2018, Black Hills Corporation (NYSE:BKH) will be paying shareholders an upcoming dividend amount of US$0.47 per share. However, investors must have bought the company’s stock before 17 August 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Black Hills’s latest financial data to analyse its dividend attributes.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How well does Black Hills fit our criteria?
The current trailing twelve-month payout ratio for the stock is 39.40%, which means that the dividend is covered by earnings. Going forward, analysts expect BKH’s payout to increase to 59.26% of its earnings, which leads to a dividend yield of around 3.49%. However, EPS is forecasted to fall to $3.52 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. BKH has increased its DPS from $1.4 to $1.9 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Black Hills produces a yield of 3.17%, which is on the low-side for Integrated Utilities stocks.
With these dividend metrics in mind, I definitely rank Black Hills as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three essential factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BKH’s future growth? Take a look at our free research report of analyst consensus for BKH’s outlook.
- Valuation: What is BKH worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BKH is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.