Got $1,000 to Invest? Here Are 3 Low-Risk Dividend Stocks to Buy Right Now.


  • Black Hills is a Dividend King with a government-mandated monopoly and a 4.8% dividend yield.

  • Kinder Morgan pays a very bankable dividend that should continue rising.

  • American States Water’s unbeatable dividend streak makes it an incredibly safe stock to buy.

  • 10 stocks we like better than Kinder Morgan ›

Dividend-paying stocks tend to be lower-risk investments compared to non-payers. They typically produce more than enough cash to fund their growth, leaving them with excess to return to shareholders via dividends.

However, some dividend stocks are less risky than others. Black Hills (NYSE: BKH), Kinder Morgan (NYSE: KMI), and American States Water (NYSE: AWR) stand out to three Fool.com contributing analysts for their lower risk profiles. As a result, they can turn $1,000 into durable streams of dividend income.

The word dividends next to a jar filled with coins and a clip holding paper money.
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Reuben Gregg Brewer (Black Hills): From a business perspective, the ultimate achievement is a monopoly. This is such a powerful industry position that the government attempts to prevent monopolies from existing…with a few exceptions.

One exception is the utility sector, as building two electric grids in one region would be prohibitively difficult. That’s why the government regulates utilities like Black Hills, which has a monopoly on natural gas distribution and electricity in the areas it serves in Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming.

There are both positive and negative aspects to being a regulated utility. One negative is that the government dictates Black Hill’s rates and capital investment plans. Regulators try to strike a balance between reward, reliability, and customer costs, leading to slow and steady growth for utilities like Black Hills. That’s a positive, as regulator-approved spending generally occurs regardless of what’s going on in the economy or on Wall Street. Investors buying Black Hills are, effectively, buying into a fairly reliable business through the economic cycle.

In the case of Black Hills, its customer base is growing around twice as quickly as the broader U.S. population. There’s a good reason to believe that more regulator-approved growth lies ahead. Looking backward, meanwhile, investors have benefited from a regularly increasing dividend payment. At this point, Black Hills is one of the few utilities to have achieved Dividend King status, with over five decades of annual hikes.

Given the company’s expectation of 4% to 6% earnings growth for the foreseeable future, meanwhile, it seems like the dividend streak will continue. Add in an above industry-average yield of 4.8% and you can see why this low-risk dividend stock might be a great buy today. A $1,000 investment will net you around 17 shares.



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