Every properly diversified portfolio needs a few low-beta, high-yielding stocks. These types of stocks serve to reduce the volatility of your portfolio and balance out the ups and downs of the market with big dividends hitting your account every quarter.

Hawaiian Electric (NYSE:HE) fits the bill with a beta of 0.07 and a 5.1% dividend yield. In case you haven't figured it out yet, Hawaiian Electric is the electric company for Hawaii, with more than 400,000 customers and a 93% market share in the islands.

The fundamental picture shows no distinct difference between Hawaiian Electric and other low-beta, high-yielding utilities. At 15, the trailing P/E is equal to the average of other similar companies. The price-to-sales ratio, at 1.09, is a little cheaper than the group, and its price-to-book number is right in line. Neither return on equity nor the debt level distinguishes the company either. By the way, most similar companies carry a lot of debt -- think of all the preferred stocks and bonds that utilities float.

One of the most important statistics for dividend-paying stocks is the payout ratio. Do the company earnings more than cover the dividend? Hawaiian Electric's payout ratio is 79% -- in line with the sector. Its dividend is $2.48 per year, and it is expected to earn $3.12 this year. There should be no problem paying the dividend.

A few years ago, the company reduced its dividend, and the stock took a hit. I believe a company is acting in a responsible manner when it takes action to get out in front of potential problems, which can prevent a crisis in the future. This tells me that management is proactive and knows what it's doing.

One big negative cited by critics is that Hawaii is one of the poorest states in the country. Due to the islands' isolation, they typically have less growth and higher unemployment than the rest of the country. While this may be true, it is also true that Hawaii has always faced these challenges. There has been less volatility for the state's economy, which means a steadier, more predictable business for Hawaiian Electric's operations and its stock price. This is ideal for a low-beta, high-yielding stock.

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Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, neither he nor his clients owned any of the stocks mentioned, but he and his wife visit Hawaii every year.