Dump load (DL) utilization at low demand hours in highly penetrated islanded microgrid is of great importance to offer voltage and frequency regulation. Additionally, load flow (LF) convergence is vital to optimize the working states of the DL allocation problem. Hence, more analysis is necessary to highlight the significance of DL in power regulation while observing the influence of LF on solution accuracy. This article proposes two LF techniques derived from backward/forward sweep (BFS), viz., general BFS (GBFS) and improved special BFS (SBFS-II). The latter is based on global voltage shared between generating units, while the former has a more general approach by considering generating bus’s local voltage. The optimal sizing and sitting of DL with optimum droop sets are determined using the mixed-integer distributed ant colony optimization (MIDACO) with the two new LF methods. The optimization problem was formulated to minimize voltage and frequency deviations as well as power losses. The problem was validated on IEEE 69- and 118-bus systems and compared with established metaheuristics. Results show that DL allocation using MIDACO with SBFS-II and GBFS has improved the solution speed and accuracy, respectively. Furthermore, the enhanced voltage and frequency results highlight DL as an efficient power management solution.