Dividend Growth Stock Overview: Black Hills Corporation

Black Hills Corporation provides electric and natural gas service to customers in
- appropriately enough - the Black Hills region of the United States.
Photo courtesy clkohan/flickr.com.

About Black Hills Corporation

Black Hills Corporation, through a variety of subsidiaries, provides electric and natural gas services to customers in South Dakota, Wyoming, Montana, and Colorado, and conducts energy exploration and development in the Rocky Mountain region.  The company is headquartered in Rapid City, SD and has over 2000 employees.  Black Hills Corporation and its predecessor company, Black Hills Power and Light Company have provided electric utility service in the Black Hills region since 1941.

Black Hills Corporation has two primary business groups: Regulated Utilities and Non-Regulated Energy.  (The company also has two other small groups: Service Guard and Tech Services, but these do not provide large contributions to the bottom line.)  The Regulated Utilities business group, through two subsegments – Electric Utilities and Gas Utilities – provides electric and natural gas service to nearly 800,000 customers in South Dakota, Wyoming, Montana, Colorado, Iowa, Nebraska and Kansas through subsidiaries.  This group has 841 MW of electricity generation capacity, 8,660 miles of electric transmission and distribution lines, and over 19,000 miles of gas distribution lines.

The Non-Regulated Energy business group engages in exploration, production and development of coal, oil and gas, and power generation for resale to generating plants, including Black Hills’ subsidiaries.  (“Non-Regulated” is a misnomer.  While this business group is not generally subject to the regulations applied to local utilities, it is required to comply with all state and federal regulations.)  Coal mining is done in Black Hills’ mine near Gillette, WY, while the oil & gas production takes place primarily in the Rocky Mountain region of the country.  The products are provided mainly to the power generation elements of the business group, which generated energy that is sold mainly to Black Hills’ Regulated Utilities business group.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol BKH.

Black Hills Corporation’s Dividend and Stock Split History

Black Hills Corporation and its predecessor company have paid quarterly dividends since 1941 and increased them since 1972.  The company usually announces its annual dividend increase at the end of January, with the stock going ex-dividend in the middle of February.

Black Hills has compounded its payout at an average rate of 3.8% over the last 5 years and 2.7% over the last 10 years.

Black Hills has split its stock twice over the last 25 years – in March 1992 and March 1998.  Both splits were 3-for-2.

Black Hills Corporation’s Direct Purchase and Dividend Reinvestment Plans

Black Hills Corporation has both direct purchase and dividend reinvestment plans, and the dividend reinvestment plan does allow for partial reinvestment of dividends. All direct purchases must be drawn from either a United States or Canadian financial institution. The fees structure for both plans are somewhat favorable for investors, although not the lowest among dividend growth companies, in that you pay a per share commission on all purchases. New investors – who are required to invest at least $250 in either a single purchase or 10 monthly purchases of $25 each – do not pay an enrollment fee, but they will pay a 6-cent per share commission. You’ll pay this same commission when you reinvest your dividends.

The minimum amount for additional cash purchases is $25.

When you sell your shares in the plan, you will pay a fee of between $15 and $30 depending on the type of sell order you request, plus a 15-cent per share commission. There’s also a $5 fee to have the proceeds from the sale directly deposited into your bank account.

Helpful Links

Black Hills Corporation’s Investor Relations Website

Current quote and financial summary for Black Hills Corporation (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Black Hills Corporation


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