Portfolio Update
The FiveTwenty portfolio received $443.64 in dividends in the past week. HD, K, MMM, ORI, PII, and WBA paid their quarterly dividend during the week.
| Past Week Dividend | $443.64 |
| Current Quarter Dividend (Q4 2022) | $1,600.82 |
| LifeTime Dividend | $7,896.10 |
| Estimated Annual Dividend | $7,588.02 |
The capital allocation for the week of 12/18/2022 to 12/24/2022 will be used to add to our position in Black Hills Corp (NYSE: BKH)
BKH – Position Update
Since our last check-in on BKH in week 30 of 2021, the company reported FY 2021 earnings on 02/09/2022, Q1 2022 earnings on 05/04/2022, Q2 2022 earnings on 08/03/2022, and Q3 2022 earnings on 11/02/2022. Additionally, the share price increased 1.6% from $67.66 to $68.75.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 52 years | 51 years | |
| Yield | 3.51% | 3.30% | 3.12% |
| Payout Ratio | 59.65% | 60.60% | 58% |
| P/E | 17.34 | 18.39 | 19.07 |
Q3 2022 earnings report
Did BKH’s latest earnings report raise any warning flags?
In Q3 2022, BKH grew revenue 21.5%, while at the same time saw decreases of 20.6% in net income and 22.9% in EPS. However, for the first 9 months of the year BKH grew revenue, net income and EPS compared to same period in 2021.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| Q3 2021 | $380.6 | $44.1 | $0.70 |
| Q3 2022 | $462.6 | $35.0 | $0.54 |
| % Change | 21.5% | (20.6)% | (22.9)% |
Additional noteworthy developments during the quarter:
- On 10/25/2022, BKH declared a dividend of $0.625 per share payable on 12/01/2022 to shareholders of record at close of business on 11/17/2022. The dividend represents a 5% increase over the previous quarterly dividend.
Looking ahead, BKH reaffirmed 2022 EPS guidance of $3.95 to $4.15 per share and initiated 2023 EPS guidance of $4.00 to $4.20 per share. BKH also reaffirmed its 5% to 7% long-term earnings growth target. Additionally, the company expects capital investment to be approximately $600 million in 2023 and increase the 2022 to 2026 capital plan by $250 million to $3.5 billion.
Thesis
Why are we adding to our position in BKH?
During 2022, BKH continued to steadily and reliably execute on the long-term strategy. It managed to continue to grow both revenue and earnings despite higher costs for fuel and labor.
At the current share price, the company offers an entry point at an attractive yield. The current yield is above the historical 10-year median.
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Photo by Susie Burleson on Unsplash
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