Comparing Black Hills and Dominion: Who's the Better Utility?

A recent report highlights the differences between Black Hills Corporation and Dominion Energy, emphasizing Black Hills' strong dividend history versus Dominion's paused dividend growth. This comparison is crucial for investors aiming to make informed decisions in the utility sector.

Date: 12-09-2024

AI Rating: 7

The report delves into significant factors impacting investment decisions between Black Hills Corporation (NYSE: BKH) and Dominion Energy (NYSE: D). One of the central themes is the emphasis on dividend yields and the broader business implications for investors.

Dividend Growth and History

Black Hills is referred to as a Dividend King, having increased its dividend for over five decades. This is a strong indicator of the company's reliability and commitment to returning value to its shareholders. In contrast, Dominion Energy has a history of cutting its dividend, most notably when it divested its midstream pipeline business, demonstrating a more volatile approach to shareholder returns. The report notes that Dominion has currently frozen its dividend as it focuses on improving its balance sheet and dividend payout ratio.

Earnings Growth Prospects

While Dominion estimates an earnings growth of 5% to 7% annually through 2029, Black Hills projects a growth rate between 4% to 6%. This projection may position Black Hills as a more consistent performer compared to Dominion, especially as the latter continues to navigate its turnaround strategy.

Market Capitalization

The differences in market capitalization are notable: Black Hills stands at approximately $4 billion compared to Dominion's $47 billion, suggesting that Dominion may have greater operational capacity and market influence, albeit paired with increased management scrutiny due to prior dividend cuts.

Investment Ratings

In terms of stock ratings based on the information, Black Hills holds a phenomenal reputation among conservative investors due to its strong history of dividend increases, while Dominion appears more suited to aggressive investors willing to bet on a turnaround.

Stocks: BKH D