Nobody Is Talking About This Dividend King Stock. Here's Why It's a Screaming Buy Right Now.

Electricity is in high demand right now, as the world increasingly shifts toward cleaner power sources and new power-hungry technologies take center stage. The numbers are quite shocking. Between 2005 and 2025, electricity demand rose 10%. Between 2025 and 2045, demand is expected to rise by 60%.

That's a step change in the demand that is likely to power years of growth for the utility industry. Big utilities, like NextEra Energy (NYSE: NEE), are getting a lot of attention. But don't overlook smaller players like high-yield Dividend King Black Hills (NYSE: BKH).

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NextEra isn't the only one leaning into growth

The big story today is NextEra Energy's planned acquisition of Dominion Energy (NYSE: D). NextEra is already one of the world's largest utilities, so this deal will cement its position at the top of the utility pack. But the real story is that it is leaning into demand growth. The market is well aware of this, and the stock's dividend yield is 2.8%, only slightly higher than the 2.6% utility average. It's not a bad stock, but you can do better on the income front and still get attractive growth opportunities with Black Hills and its 3.8% yield.

For its part, Black Hills plans to merge with Northwestern Energy (NASDAQ: NWE). The two companies operate in the same region, so the pairing makes both geographic and financial sense. Notably, the combined business will be nearly twice as large, and earnings growth is projected to rise from 4% to 6% for the two individually to 5% to 7% combined. That's a very attractive growth rate for a high-yield utility.

But the really interesting part of the story is that Black Hills is one of a small handful of utilities that has achieved Dividend King status, having increased its dividend annually for over 50 years. This is a reliable dividend stock with a growth catalyst. That said, it will still be a relatively small utility even after the merger. But being small isn't a bad thing; companies don't become Dividend Kings by accident. And, just like its larger brethren, Black Hills sees the changing utility landscape, and it is taking decisive action.

A utility pick for a conservative dividend investor

To be fair, Black Hills is probably never going to be an exciting stock. But if you are trying to maximize the income you generate and want exposure to the step change in electricity demand driven by AI and data centers, Black Hills is an under-the-radar stock you may want to dig into right now.

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.