Black Hills Corporation (BKH): One of the Best Mid-Cap Dividend Aristocrats to Invest in Now

Yahoo

07-05-2025

According to analysts, instead of picking individual mid-cap dividend stocks, investors should consider exchange-traded funds (ETFs) as an alternative. These funds offer tax efficiency and diversification across multiple industries and typically come with low expense ratios.
'Now is the time for bargain-hunting since midcap dividend stocks are trading at historically low valuations relative to large-cap stocks. They could be the sweet spot for investors when you consider they are more insulated from tariff exposure and are expected to outpace the earnings growth of large-caps this year.'
Analysts are leaning toward mid-cap dividend stocks largely because they appear undervalued. As of April 30, the MidCap Dividend Aristocrats Index had a price-to-earnings (P/E) ratio of 17.87, which is significantly lower than the P/E ratios of the broader market and the Nasdaq. Larry Adam, chief investment officer at Raymond James, made the following comment about this:
Alongside investors, analysts are also recommending that income portfolios include mid-cap companies. According to Simeon Hyman, global investment strategist at ProShares, these stocks can help cushion downside risk amid current market volatility. He noted that this is particularly relevant for investors whose portfolios are heavily weighted toward large-cap growth names like the 'Magnificent Seven' tech giants. Hyman emphasized the importance of diversifying equity exposure across a wider range of asset classes to help manage risk in today's environment.
There's a common misunderstanding that dividend payouts are mostly limited to large-cap companies, but mid-cap firms are often just as generous—and notably stable—when it comes to dividends. Recently, mid-cap dividend stocks, which had fallen out of favor, are making a comeback and drawing renewed interest from investment strategists. The MidCap Dividend Aristocrats Index, which includes 53 mid-sized companies that have raised their dividends for at least 15 consecutive years, has declined just 1.2% year-to-date through May 5. In comparison, the broader market has dropped 3.7% over the same period. Notably, these mid-cap companies generate about 82% of their revenue from within the US, significantly higher than the roughly 60% average for broader market firms and 53% for those in the Nasdaq Composite, based on data from S&P Dow Jones Indices and FactSet as of April 30.
We recently published a list of the 12 Best Mid-Cap Dividend Aristocrats to Invest in Now . In this article, we are going to take a look at where Black Hills Corporation (NYSE:BKH) stands against other mid-cap dividend aristocrats.
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For instance, the WisdomTree U.S. MidCap Dividend ETF (DON), which manages $3.47 billion in assets, posted a year-to-date return of -6.47% through April 30, with a 12-month return of 4.72% and a 12-month yield of 2.54%. Its expense ratio stands at 0.38%. Meanwhile, the ProShares S&P MidCap Dividend Aristocrats ETF (REGL), with $1.69 billion in assets, returned -1.88% so far this year, delivered a 6.96% one-year return, and yields 2.60% over 12 months. Its expense ratio is 0.40%, according to Morningstar Direct.
Though both ETFs are showing negative returns for the year, their dividend payouts help cushion losses. Financial advisers often recommend reinvesting those dividends rather than withdrawing the cash, as this approach can build wealth over time by acquiring more shares while prices remain subdued.
Black Hills Corporation (BKH): One of the Best Mid-Cap Dividend Aristocrats to Invest in Now
A line of wind turbines against a clear sky, reflecting the companies clean energy efforts.
Our Methodology
For this list, we scanned the holdings of MidCap 400 Dividend Aristocrats, which tracks the performance of mid-sized companies within the MidCap 400 index that have maintained a consistent track record of increasing dividends annually for at least 15 years. From the index, we picked 12 dividend stocks that have garnered the most attention from hedge fund investors by the conclusion of Q4 2024, using data from Insider Monkey's database. The stocks are ranked according to the number of hedge funds having stakes in them.
At Insider Monkey, we are obsessed with hedge funds. 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's 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).
Black Hills Corporation (NYSE:BKH)
Number of Hedge Fund Holders: 24
Black Hills Corporation (NYSE:BKH) is an American diversified energy company, headquartered in South Dakota. The company mainly offers electric and gas utility services to its consumers. It presents a strong opportunity for income-focused investors, with its customer base growing at nearly triple the pace of the US population. Backed by a $4.7 billion capital investment plan aimed at ensuring dependable power access for its expanding customer base, the utility is well-positioned for steady growth. Management anticipates annual earnings to rise by approximately 4% to 6% in the coming years. The stock has surged by over 5% since the start of 2025.
In the fourth quarter of 2024, Black Hills Corporation (NYSE:BKH) posted revenue of $597 million, reflecting a slight year-over-year increase of 1%. Operating income for the quarter rose sharply to $163.3 million, up from $136.5 million in the same period a year earlier. The company also revised its five-year capital investment forecast upward by 10%, now planning to invest $4.7 billion between 2025 and 2029, including $1.0 billion earmarked for 2025 alone.
Currently, Black Hills Corporation (NYSE:BKH) pays a quarterly dividend of $0.676 per share, following a 4% increase in January. This marked the 55th consecutive year of dividend growth, which makes BKH one of the best dividend stocks on our list. As of May 5, the stock supports an attractive dividend yield of 4.43%.
Overall, BKH ranks 9th on our list of the best mid-cap dividend aristocrats to buy now. 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.
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Disclosure: None. This article is originally published at Insider Monkey.