{"id":125017,"date":"2025-04-27T02:43:34","date_gmt":"2025-04-27T02:43:34","guid":{"rendered":"https:\/\/teknomers.com\/en\/is-black-hills-corporation-bkh-the-top-dividend-stock-for-generating-long-term-passive-income\/"},"modified":"2025-04-27T02:43:34","modified_gmt":"2025-04-27T02:43:34","slug":"is-black-hills-corporation-bkh-the-top-dividend-stock-for-generating-long-term-passive-income","status":"publish","type":"post","link":"https:\/\/teknomers.com\/en\/is-black-hills-corporation-bkh-the-top-dividend-stock-for-generating-long-term-passive-income\/","title":{"rendered":"Is Black Hills Corporation (BKH) the Top Dividend Stock for Generating Long-Term Passive Income?"},"content":{"rendered":"

What are the key factors influencing the recent surge in interest in passive income among younger generations?<\/strong> How does Black Hills Corporation compare to other top dividend stocks for those seeking long-term passive income?<\/strong> What role does digital entrepreneurship play for Gen Z in creating alternative income sources?<\/strong> How can investments in dividend stocks provide a more stable income compared to other methods?<\/strong><\/p>\n

We recently published a list of the 15 Best Dividend Stocks to Buy for Long-Term Passive Income<\/strong><\/a>. In this article, we are going to take a look at where Black Hills Corporation (NYSE:BKH) stands against other best dividend stocks for long-term income. <\/p>\n

Passive income, which refers to money earned with little ongoing effort, was once largely the domain of the wealthy \u2013 those who could afford to invest in rental properties or build up portfolios that reliably generated dividends. However, since the pandemic, the idea has gained fresh momentum, particularly among millennials and Gen Z, who are coming up with increasingly inventive ways to establish passive income sources. <\/p>\n

According to experts, the surge in interest is being driven by a mix of tough job market conditions and the strong influence of social media. While passive income can be a viable option for some, it may not live up to the hype for everyone, as the promise of easy earnings often proves more complex in practice. <\/p>\n

Side hustles are becoming increasingly popular as a way for people to bring in passive income. Gen Z, in particular, has moved past the misconception that passive income involves no effort. Instead, they see launching a side business as a valid way to earn money alongside a full-time job. In the past, starting a business often meant renting a physical storefront and paying for newspaper ads. Today, it\u2019s a different story\u2014entrepreneurs can build a website from home using platforms like Squarespace, promote products on TikTok, and hold meetings with clients or collaborators over Zoom. For Gen Z\u2014many of whom were born in the late 1990s\u2014these digital tools have been part of their everyday lives for as long as they can remember. <\/p>\n

Natasha Stanley, head coach at Careershifters.org, pointed out that individuals now have far more resources at their disposal to build something independently. She observed that access to the entrepreneurial space had become more inclusive and widespread. The shift toward remote work and education during the pandemic, she noted, had also made the idea of self-employment feel more within reach for many people.<\/p>\n

One proven way of generating passive income is through investments in dividend stocks. Companies that generate surplus profits often decide to share a portion of that money with their investors through dividends. The amount they return is typically measured using the dividend yield, which is calculated by dividing the yearly dividend payment by the current stock price. <\/p>\n

According to Brian Bollinger, founder of Simply Safe Dividends, building a portfolio focused on dividend-paying stocks can be a game-changer. He explains that depending on regular dividend payments\u2014rather than relying solely on profits from selling stocks\u2014can help reduce the risk of draining your investments. Unlike managing rental properties, he notes, collecting dividends requires very little effort. He made the following comment about dividend investing: <\/p>\n

\u201cYou could be setting yourself up quite nicely. Because not only do stocks pay a dividend, but they might increase the dividend, and they could benefit from price appreciation as a result of improving earnings outlook and so forth. It\u2019s really about finding companies that can pay safe and rising dividends over time. And as long as that holds true over your retirement horizon, that\u2019s a pretty, pretty nice thing to have.\u201d <\/p>\n

\"Is<\/p>\n

A line of wind turbines against a clear sky, reflecting the company’s clean energy efforts.<\/p>\n

Our Methodology:<\/strong> <\/p>\n

For this article, we scanned Insider Monkey\u2019s database of over 1,000 hedge funds as of Q4 2024 and selected stocks with strong dividend policies, sound financials, and dividend growth histories. These stocks have a minimum of 1% yield, as of April 24. The stocks are then ranked according to hedge funds having stakes in them. <\/p>\n

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter\u2019s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here)<\/em>.<\/p>\n

Number of Hedge Fund Holders: 24<\/strong> <\/p>\n

Black Hills Corporation (NYSE:BKH) is a South Dakota-based diversified energy company that offers electric and gas utility services. The company provides services to around 1.35 million customers spread across several states, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Its financial standing is solid, supported by an investment-grade balance sheet. Notably, customer growth in its service areas is nearly three times faster than the national population growth rate. Thanks to the regulatory-approved monopoly it holds in these regions, combined with the essential nature of electricity in today\u2019s world, the company could offer a relatively stable investment option for those looking to weather market volatility. Since the start of 2025, the stock has surged by over 4%. <\/p>\n

In the fourth quarter of 2024, Black Hills Corporation (NYSE:BKH) reported revenue of $597 million, which showed a modest 1% growth from the same period last year. The company\u2019s operating income for the quarter came in at $163.3 million, which showed a significant jump from $136.5 million in the prior-year period. It has raised its five-year capital spending outlook by 10%, bringing the total to $4.7 billion for the period from 2025 to 2029. This includes a planned investment of $1.0 billion for the year 2025 alone. <\/p>\n

Black Hills Corporation (NYSE:BKH) currently offers a quarterly dividend of $0.676 per share, having raised it by 4% in January. This was the company\u2019s 55th consecutive year of dividend growth, which makes BKH one of the best dividend stocks for passive income. In addition to strong dividend growth track record, the stock also offers an attractive dividend yield of 4.46%, as of April 24. <\/p>\n

Overall, BKH ranks 15th<\/strong> on our list of the best dividend stocks for long-term passive income. While we acknowledge the potential of BKH as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than BKH but that trades at 10 times its earnings and grows its earnings at double-digit rates annually, check out our report about the dirt cheap dividend stock<\/a><\/strong>. <\/p>\n

READ NEXT:<\/strong> 20 Best AI Stocks To Buy Now<\/a> and<\/strong> 30 Best Stocks to Buy Now According to Billionaires<\/a>. <\/p>\n

Disclosure: None. This article is originally published at Insider Monkey<\/a><\/strong>.<\/p>\n

Is Black Hills Corporation (BKH) the Best Dividend Stock to Buy for Long-Term Passive Income?<\/h1>\n

In the landscape of investing, particularly in the realm of dividends, long-term passive income is a primary goal for many investors. Among the myriad of options available, Black Hills Corporation (BKH), an energy company primarily engaged in providing gas and electric utility services to over a million customers in eight states, stands out for its stable dividend payouts and growth potential. But is it the best dividend stock you can buy? Let’s take a closer look.<\/p>\n

Understanding Black Hills Corporation<\/h2>\n

Founded in 1883 and headquartered in Rapid City, South Dakota, Black Hills Corporation operates through multiple segments, including utilities that provide electricity and natural gas. The company is also involved in the production and marketing of natural gas, along with coal mining operations. This diversification helps stabilize revenue streams, making the company less susceptible to market fluctuations.<\/p>\n

Strong Dividend History<\/h2>\n

One of the primary reasons investors consider dividend stocks is their potential to provide a steady income stream. Black Hills Corporation has a robust history of dividend payments, having increased its dividend for 51 consecutive years. This remarkable track record places BKH in an elite category of dividend aristocrats\u2014companies that consistently increase dividends for over 25 years.<\/p>\n

The current dividend yield for Black Hills Corporation is approximately 3.3%, which is competitive when compared to other utility stocks. Moreover, the company has maintained a prudent payout ratio, ensuring that it retains enough earnings to fund operations and growth while rewarding shareholders. The combination of a stable dividend yield and consistent growth makes BKH a strong candidate for long-term passive income.<\/p>\n

Financial Health and Growth Potential<\/h2>\n

For any dividend stock to be a good long-term investment, it must also have strong financials. Black Hills Corporation has consistently demonstrated solid revenue growth. In recent years, the company has invested heavily in infrastructure, renewable energy projects, and efficient technologies to enhance its service delivery. These investments are likely to result in long-term growth, as they not only improve efficiency but also align with the growing demand for sustainable energy solutions.<\/p>\n

The company has reported a year-over-year revenue increase, and analysts project that this trend will continue. According to recent earnings reports, Black Hills is expected to see a compounded annual growth rate (CAGR) of around 6% over the next several years. This growth potential adds to its attractiveness as a dividend stock, as increasing revenues typically lead to higher dividends.<\/p>\n

Economic Resilience<\/h2>\n

Utilities are typically considered defensive stocks, providing essential services that remain in demand regardless of economic conditions. Black Hills Corporation benefits from this characteristic, making it more resilient during economic downturns. The company’s diverse service offerings further mitigate risks associated with fluctuations in one particular market.<\/p>\n

Moreover, with the increasing emphasis on renewable energy and sustainability, BKH’s investments in cleaner energy sources position it well for future growth. The U.S. is undergoing a significant transition toward cleaner energy solutions, and companies like Black Hills that adapt to these changes are likely to thrive in the long run.<\/p>\n

Valuation Metrics<\/h2>\n

When evaluating a stock for long-term investment, it’s essential to consider its current valuation in conjunction with its future growth potential. At present, Black Hills Corporation’s price-to-earnings (P\/E) ratio is in line with industry averages but may appear high compared to the broader market. However, it’s crucial to consider the utility sector’s unique characteristics and the potential for stable growth. <\/p>\n

One way to assess BKH’s valuation is through its dividend discount model (DDM), which calculates the present value of expected future dividends. If the intrinsic value derived from DDM exceeds its market price, it may indicate that BKH is undervalued, thus presenting an attractive buying opportunity for long-term investors seeking passive income.<\/p>\n

Risks to Consider<\/h2>\n

While Black Hills Corporation has many attractive qualities, no investment is without risk. Regulatory changes in the energy sector can influence profitability, as utilities often face scrutiny over rates and service quality. Moreover, competition in the renewable energy space is heating up, which could impact market share and margins.<\/p>\n

Natural disasters can also affect operations, particularly in areas prone to wildfires or severe weather. However, BKH has diversified its operations to mitigate such risks, and its steady cash flow typically allows it to withstand short-term challenges.<\/p>\n

Conclusion: Is BKH the Best?<\/h2>\n

Given its robust dividend history, financial health, economic resilience, and growth potential, Black Hills Corporation certainly merits consideration for long-term passive income investors. While it may not be the only option, its consistent performance and commitment to rewarding shareholders make it an appealing choice in the utility sector.<\/p>\n

Investors focused on receiving regular income while also aiming for capital appreciation may find BKH to be an excellent addition to their portfolio. However, like any investment, conducting thorough research and considering individual financial situations is crucial before making any commitments. Thus, while Black Hills Corporation is undoubtedly a strong contender for the title of the best dividend stock for long-term passive income, the ultimate decision lies in aligning your investment strategy with your financial goals and risk tolerance.<\/p>\n

Black Hills Corporation (BKH) is a utility company with a strong history of dividend payments, making it a potential candidate for long-term passive income.<\/p>\n

Stock market information for Black Hills Corporation (BKH)<\/h2>\n