This Dividend King Is Getting In on the AI Energy Boom With Its Recent Deal with Google. Is It a Buy?
Key PointsBlack Hills signed agreements with Google to supply 2.7 gigawatts of power to its Wyoming data center campus through 2048.
Black Hills (BKH -0.73%) is a utility company with an impressive 56-year history of consecutive dividend increases, making it a Dividend King. Regulated utilities are typically considered unexciting due to their stable cash flows and low volatility, but they have recently attracted attention for their long-term agreements with major technology firms.
Black Hills recently announced multiple deals with Google, including one to supply energy infrastructure and services for a hyperscale data center campus in Cheyenne, Wyoming, lasting until 2048.
Under this agreement, Black Hills will provide 2.7 gigawatts (GW) of power, comprising 590 megawatts (MW) of grid-connected service and 2.1 GW of privately managed, off-grid microgrid resources. This partnership is expected to generate $150 million in annual net income and $2.4 billion in unlevered free cash flow through 2048. To build the necessary infrastructure, Black Hills plans to invest $1.8 billion in capital expenditures between 2027 and 2029.
This deal allows Black Hills to strengthen its position as a leading energy provider in Wyoming, a region rapidly becoming a data center hub due to favorable regulations, a cool climate, and significant grid investments. Google's presence in the area, along with other tech giants like Microsoft and Meta Platforms, is fueling Black Hills' growth.
With 56 years of dividend increases and a 3.6% yield, Black Hills offers investors a strong utility stock with substantial potential as Wyoming's data center market expands and energy demand rises.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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