Key Points

The average utility has a 2.6% yield, but Black Hills' yield is 3.8%.
Black Hills has increased its dividend annually for more than 50 years, one of just a few utilities to do so.

Electricity demand is surging currently, driven by the global move toward cleaner energy sources and the rise of power-intensive new technologies. The figures are striking. Between 2005 and 2025, electricity demand grew 10%. Between 2025 and 2045, demand is projected to climb 60%.

This represents a major shift in demand that should fuel extended expansion across the utility sector. Large players such as NextEra Energy receive significant focus. Yet smaller names like high-yield Dividend King Black Hills deserve attention too.

Image source: Getty Images.

NextEra is not alone in pursuing expansion

The main headline now centers on NextEra Energy's planned purchase of Dominion Energy. NextEra is already among the largest utilities globally, so this transaction will strengthen its leading position. The key angle is its focus on demand growth. Investors recognize this, and the stock's dividend yield stands at 2.8%, just above the 2.6% utility average. It remains a solid holding, but better income opportunities with appealing growth exist via Black Hills and its 3.8% yield.

Black Hills intends to combine with Northwestern Energy. Both firms serve overlapping areas, making the union logical from geographic and financial standpoints. The merged entity will be nearly double in size, with earnings growth expected to improve from 4% to 6% individually to 5% to 7% together. This represents an appealing growth pace for a high-yield utility.

The standout element is that Black Hills ranks among the few utilities to reach Dividend King status through more than 50 years of annual dividend increases. It offers a dependable payout alongside a growth driver. Even post-merger it will stay relatively compact. Size is not necessarily negative, however, since Dividend King status arises from consistent execution. Like its larger peers, Black Hills recognizes shifts in the utility environment and is responding with clear steps.

A utility choice suited for conservative income investors

Black Hills may never rank as a flashy stock. Still, for those seeking to boost income while gaining exposure to the major rise in electricity demand from AI and data centers, Black Hills stands as a quiet opportunity worth examining now.

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Reuben Gregg Brewer has positions in Black Hills. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.