AI Bubble Risk? 2 Dividend Stocks to Consider
Is the AI Boom a Bubble? These 2 Dividend Stocks Say No
AI Image Created Under the Direction of Shannon Tokheim
Key Points
- Valuations in the AI sector remain high, but historical patterns suggest a bubble is unlikely to burst while caution prevails.
- Black Hills Corp. is positioned to benefit from AI-related energy demands through its utility footprint in rural data center boomtowns.
- Nutrien offers a defensive AI hedge, with stable demand driven by global agriculture and minimal AI sector exposure.
As 2025 draws to a close, technology investors are grappling with a blend of enthusiasm and apprehension. With AI stock valuations reaching unprecedented levels, the pivotal question for 2026 revolves around whether the market has outpaced the actual developments in artificial intelligence.
Recent developments have added to investor jitters—for instance, Oracle reportedly lost a significant funding partner, causing a temporary dip in sentiment. Nevertheless, Marc Lichtenfeld of The Oxford Group notes that the market’s response was contained and not indicative of a broader downturn: “It’s not like the markets are tanking and crashing. It’s just down today a bit on the news.”
Lichtenfeld, a seasoned dividend investor and author of Get Rich with Dividends, advises against hasty conclusions. “Typically, bubbles don’t burst when everybody is talking about the possibility of the bubble bursting,” he explains. “When the bubble bursts is when everybody thinks it’s only going to go up forever.” Current market sentiment reflects awareness rather than blind optimism.
Lichtenfeld advocates focusing on companies boasting robust cash flows and increasing dividends as a strategy to capitalize on the AI trend or protect against potential setbacks. He has recently updated his recommendations for top dividend stocks heading into 2026, selecting options suitable for both optimistic growth seekers and conservative portfolios.
In his recent evaluation, Lichtenfeld highlighted two lesser-known dividend-paying stocks: one poised to gain from AI’s expanding infrastructure needs and another designed to perform well regardless of tech sector fluctuations.
Black Hills Corp.: A Utility Stock Charging the AI Boom
One of Lichtenfeld’s preferred approaches to the AI phenomenon is Black Hills Corp., a utility company headquartered in South Dakota, strategically located in emerging AI data center hotspots.
Black Hills Dividend Payments
Dividend Yield: 4.00%
Annual Dividend: $2.70
Dividend Increase Track Record: 55 Years
Annualized 5-Year Dividend Growth: 4.87%
Dividend Payout Ratio: 68.18%
Recent Dividend Payment: Dec. 1
“Cheyenne and other parts of Wyoming are becoming boomtowns for data centers because land and electricity are cheap,” he says. As power-intensive AI technologies proliferate, utilities serving these underserved rural regions stand to gain substantially.
What elevates Black Hills further, according to Lichtenfeld, is its pre-existing forecast of 5% to 7% annual earnings growth prior to the data center surge. Now, with demand surging from major players like Microsoft and Meta Platforms, the growth trajectory appears even more promising.
Black Hills is also pursuing the acquisition of NorthWestern Energy, which would add 800,000 customers and broaden its service territory significantly.
While utilities are often viewed as defensive holdings, Lichtenfeld sees Black Hills as a unique growth opportunity. “It’s kind of a rare bird—a utility stock with upside.” The company maintains an impressive dividend history, increasing payouts annually since 1971, with a current yield around 3.8%.
Nutrien: A Defensive Play Built Outside the AI Hype
For investors wary of AI exuberance or seeking diversification, Lichtenfeld recommends Nutrien Ltd., a leading global producer of potash fertilizers.
Nutrien Dividend Payments
Dividend Yield: 3.50%
Annual Dividend: $2.18
Dividend Increase Track Record: 7 Years
Annualized 5-Year Dividend Growth: -1.53%
Dividend Payout Ratio: 58.76%
Next Dividend Payment: Jan. 16
“Regardless of what’s happening in AI, people have to eat,” he says. “And to grow more food, you need fertilizer.” This fundamental demand supports Nutrien’s position, commanding about 20% of the worldwide potash market and demonstrating resilience through various commodity cycles.
Lichtenfeld views the company’s absence of direct tech exposure as a strength. “If you’re looking for an investment that’s really outside the scope of AI in case there is a bubble crash, this is one of those plays.”
Despite lukewarm Wall Street coverage—with about half of analysts assigning hold or sell ratings—Lichtenfeld interprets this as undervaluation. “I prefer stocks that Wall Street analysts don’t like because they’re often late to the party. When those upgrades finally come, they can really push the stock higher.”
Trading at a 3.5% dividend yield, a forward P/E of 13, and just 7 times cash flow, Nutrien appears attractively valued. Moreover, should AI enhance agricultural productivity, it could drive even greater demand for Nutrien’s products.
What About Palantir and NVIDIA?
The leading AI companies continue to capture attention. Lichtenfeld points to Palantir and NVIDIA as exemplars of lofty valuations—Palantir at 250 times earnings and 225 times cash flow, NVIDIA at 55 times.
Although these figures are striking, he urges restraint. “Bubbles don’t burst because of high valuations. When they do burst, those valuations make it worse. But people don’t usually sell stocks just because they’re expensive—very often, they keep buying them.”
Focus on Dividends, Regardless of the Narrative
Whether optimistic or cautious about AI, Lichtenfeld emphasizes dividends as a reliable foundation. “Even if the market drops 10%, a 5% or 6% dividend yield softens the blow,” he says. “And in a strong market, that dividend adds to your total return.”
By prioritizing firms that reliably increase dividends, investors can mitigate market swings, beat inflation, and harness the power of compounding over time.
