2 Stocks That Raised Their Dividends in the Last 6 Recessions

In the ever-changing landscape of the stock market, finding companies that can weather economic storms and continue to reward shareholders is a challenge. However, there are a few standout performers that have consistently raised their dividends through multiple recessions. Today, we'll take a closer look at two such companies: Black Hills Corporation (NYSE: BKH) and RLI Corp. (NYSE: RLI).



Black Hills Corporation: A Steady Hand in Stormy Weather

Black Hills Corporation is a utility company that provides natural gas and electricity to roughly 1.3 million customers across eight states. The company's regulated nature means that it has the government's approval for rate increases and capital spending plans, providing a level of stability that is rare in the volatile world of investing.

One of the most impressive aspects of Black Hills Corporation is its dividend history. The company has increased its dividend annually for 53 years, including through the recession triggered by the coronavirus pandemic and the Great Recession. This incredible streak makes Black Hills a Dividend King, a title reserved for companies that have increased their dividends for at least 50 consecutive years.



While the dividend growth rate of around 5% might not be exciting for income investors focused on dividend growth, it is fairly decent for a utility and provides a reliable income stream that grows modestly over time. In fact, the company's dividend yield is the highest it has been in a decade, making it an attractive option for investors seeking stable income streams.

RLI Corp.: A Specialty Insurer with a Strong Track Record

RLI Corp. is a specialty insurance company that operates in niche markets, focusing primarily on the excess and surplus (E&S) insurance markets. The company's largest offerings are in the commercial excess and personal umbrella space, providing higher liability limits than primary policies and covering risks like property damage, bodily injury, and legal expenses.

RLI Corp. has displayed excellent underwriting ability and a sound business model, allowing it to raise its dividend payout for over 50 consecutive years. Over the same period, it has delivered total returns (including reinvested dividends) of 16.8% annually, crushing the broader market along the way.



The company's specialty insurance focus allows it to be more selective about the risks it chooses to cover and how much it charges. Its policies are tailor-made for businesses or individuals and aren't subject to the strict regulatory requirements that traditional property and casualty insurers face. As a result, RLI Corp. can enjoy higher profit margins in the process.

Why These Companies Stand Out

Both Black Hills Corporation and RLI Corp. exhibit several key factors that contribute to their resilience during economic downturns. These factors include:

1. Steady Demand and Essential Services: Both companies operate in sectors with steady demand across business cycles. Black Hills provides essential services like natural gas and electricity, while RLI Corp. offers insurance coverage that is crucial for businesses and individuals.

2. Regulatory Protection and Pricing Power: Black Hills Corporation's regulated nature provides a level of stability that is rare in the investing world. RLI Corp., on the other hand, has the pricing power to adjust rates to reflect inflationary pressures, ensuring that its earnings remain robust.

3. Strong Financial Health and Low Debt Levels: Both companies have strong financial health and low debt levels, allowing them to navigate economic downturns with ease.

4. Diversified Revenue Streams: RLI Corp. benefits from its diversified revenue streams, which help stabilize earnings and ensure consistent dividend payouts.

5. Long History of Expertise and Trust: Both companies have a long history of expertise and trust, making them better positioned to navigate economic downturns.

Implications for Investors

For investors seeking stable income streams, companies like Black Hills Corporation and RLI Corp. offer a more attractive option. These companies have demonstrated the ability to navigate economic downturns and continue to increase their dividends, providing a reliable source of income. In contrast, the broader market's declining dividend yields and the volatility associated with technology stocks make them less suitable for investors looking for stable income streams.

In conclusion, Black Hills Corporation and RLI Corp. are two companies that have consistently raised their dividends through multiple recessions, making them attractive options for investors seeking stable income streams. Their resilience during economic downturns, strong financial health, and steady demand for their services make them standout performers in the world of investing.