Matt DiLallo, Neha Chamaria, and Reuben Gregg Brewer, The Motley Fool
Energy stocks are having a solid year. The average one in the S&P 500 was up 14% heading into the year's final month. While that has underperformed the S&P 500, it's a solid showing, considering that oil and gas prices have been weaker this year.
Reuben Gregg Brewer (Black Hills): When it comes to boring stocks, utilities like Black Hills normally score high on the snooze list. This particular regulated natural gas and electric utility serves 1.3 million customers in parts of Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Providing reliable energy is basically all it does, but it does it pretty well.
That's highlighted by the fact that Black Hills has increased its dividend annually for 54 consecutive years (and paid one for 82 consecutive years). Talk about consistency! And, it is worth noting that the 54 years is enough to get Black Hills onto the highly elite list of Dividend Kings.
Looking forward, the streak is likely to continue, given the company's investment-grade-rated balance sheet and $4.3 billion in capital spending plans. Basically, it has the wherewithal to support its growth plans. The best part, however, is that the investment plans are really normal for a utility, including things like system modernization and integrity efforts and capacity developments to keep up with growing demand (and to clean up older generating capacity). Those are the types of mundane things regulators like to see.
Now for the exciting part of the story. You get all of that boring, sleep-well-at-night goodness and a historically high 4% dividend yield. For reference, the S&P 500 is only yielding 1.2%, and the average utility yields about 2.8%. Wait, a reliable dividend stock with a high yield -- maybe Black Hills isn't that boring after all!