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Black Hills Corporation (NYSE:BKH) Stock Goes Ex-Dividend In Just Three Days

It looks like Black Hills Corporation (NYSE:BKH) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Black Hills' shares on or after the 13th of February will not receive the dividend, which will be paid on the 1st of March.

The company's next dividend payment will be US$0.63 per share, and in the last 12 months, the company paid a total of US$2.50 per share. Based on the last year's worth of payments, Black Hills has a trailing yield of 3.9% on the current stock price of $64.43. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Black Hills

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Black Hills paid out more than half (60%) of its earnings last year, which is a regular payout ratio for most companies. Black Hills paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Black Hills's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Black Hills has lifted its dividend by approximately 5.4% a year on average.

To Sum It Up

Is Black Hills an attractive dividend stock, or better left on the shelf? Black Hills has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. We think this is a pretty attractive combination, and would be interested in investigating Black Hills more closely.

In light of that, while Black Hills has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that Black Hills is showing 2 warning signs in our investment analysis, and 1 of those can't be ignored...

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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