In this article, we discuss the best dividend stocks according to Jim Cramer. You can skip our detailed analysis of Cramer's market predictions, and go directly to read 5 Best Dividend Stocks According To Jim Cramer.
The investing landscape has widely transformed this year as recession fears pull investors toward previously overlooked defensive securities. Jim Cramer, the host of Mad Money on CNBC, advises investors to invest in profitable companies that have strong shareholder returns. In addition to this, he also talked about loading up on high-yielding dividend stocks in one of his shows recorded in late September.
In one of his recent shows in October, Cramer mentioned that tech stocks have fallen this year because of the tightening monetary policy. However, the decline in tech stocks opens new investment avenues for investors where they can take refuge in other sectors. According to Cramer, some of the industries that investors should focus on include fossil fuels, healthcare, travel, defense, and food and beverage.
According to Cramer, the continuous interest rate hikes this year indicate that the trend will likely continue for the rest of the year. This eventually increases the risks of a possible recession. He further mentioned that though the rapidly rising treasury yields have put pressure on dividend stocks, they still offer better investment opportunities than the rest of the market. He mentioned that investors should steadily build their position in dividends to gain maximum profits.
Dividend stocks are becoming increasingly popular among investors this year as many companies reinstated and raised their payouts after the pandemic of 2020. According to the third quarter report of the S&P Dow Jones Indices, cash dividends within the S&P 500 set record payments in Q3 and saw an 8.5% growth from the same period last year. The report also highlighted that dividends are expected to reach their record by the next quarter. Some of the most popular dividend stocks include Carlisle Companies Incorporated (NYSE:CSL), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO) as they have raised their dividends for a long time.
In view of the above-stated arguments and to further expand upon Cramer’s investment strategy, we will discuss the best dividend stocks according to Jim Cramer.
Best Dividend Stocks According To Jim Cramer
Our Methodology:
We selected dividend stocks from some of Jim Cramer's recent programs in which he recommended these securities. These stocks are ranked according to their dividend yields, as of November 24.
Dividend Yield as of December 2: 1.76% Archer-Daniels-Midland Company (NYSE:ADM) is an American food processing company with over 270 food processing plants across the globe. In the third quarter of 2022, the company paid $677 million to shareholders in dividends, which places it as one of the best dividend stocks on our list. Moreover, it has been raising its dividends consistently for the past 49 years. The company currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 1.76%, as of December 2. In one of his shows recorded in August this year, Cramer recommended Archer-Daniels-Midland Company (NYSE:ADM) for its consistent dividend growth and called the stock one of his favorites for the rest of 2022. At the end of Q3 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 42 in the previous quarter. These stakes are valued collectively at nearly $600 million. Archer-Daniels-Midland Company (NYSE:ADM) is one of the best dividend stocks to consider alongside Carlisle Companies Incorporated (NYSE:CSL), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO). Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
Coterra Energy Inc. (NYSE:CTRA) is a Texas-based energy company that engages in the exploration of hydrocarbons. The company has been raising its dividends consistently for the past six years with a 5-year CAGR of 32.6%. The company's strong dividend growth makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.68 per share and has a dividend yield of 2.15%, as of December 2.
Cramer recommended Coterra Energy Inc. (NYSE:CTRA) while discussing Morgan Stanley's 'Year of the Yield' report. He highlighted the company's annual dividend yield and its dividend growth over the years.
In Q3 2022, Coterra Energy Inc. (NYSE:CTRA) reported revenue of $2.52 billion, which showed a 472.2% growth from the same period last year. The company generated over $1.7 billion in operating cash flow and its discretionary free cash flow came in at $1.5 billion.
At the end of September 2022, 39 hedge funds tracked by Insider Monkey owned stakes in Coterra Energy Inc. (NYSE:CTRA), compared with 40 in the previous quarter. These stakes are valued collectively at $400 million.
Palm Valley Capital Management mentioned Coterra Energy Inc. (NYSE:CTRA) in its Q2 2022 investor letter. Here is what the firm has to say:
“We sold two Fund positions during the quarter which includes Coterra Energy (NYSE:CTRA). As a result of surging oil and natural gas prices, Coterra reached our valuation, and we exited the position in April.”
Dividend Yield as of December 2: 2.75% The Coca-Cola Company (NYSE:KO) is an American multinational beverage company that sells and manufactures non-alcoholic beverages and syrups. Cramer recommended the stock earlier this year because of its defensive nature and consistent dividends. He further mentioned that KO is a recession-resistant business and is a buy for the rest of the year. The Coca-Cola Company (NYSE:KO) has a strong balance sheet as the company generated $8.1 billion in operating cash flow in the first nine months. The company's free cash flow for the period came in at $7.3 billion. The Coca-Cola Company (NYSE:KO) has been making consistent dividend payments since 1920 and raised its payouts for 60 years in a row. This makes the company one of the best dividend stocks on our list. As of December 2, the stock has a dividend yield of 2.75%. At the end of Q3 2022, Berkshire Hathaway was the largest stakeholder of The Coca-Cola Company (NYSE:KO) with 400 million shares. Overall, 59 hedge funds in Insider Monkey’s database owned stakes in the company in Q3, with a total value of over $25 billion. Carillon Tower Advisers mentioned The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter. Here is what the firm has to say:
“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”
Best Buy Co., Inc. (NYSE:BBY) is an American multinational consumer electronics retail company based in Minnesota. The company is one of the best dividend stocks on our list as it has raised its payouts for nine years in a row. It currently offers $0.88 per share in quarterly dividends with a dividend yield of 4.06%, as of December 2. Cramer recommended BBY earlier this year because of the company's dividend hike. In one of his recent shows, Cramer gave a positive outlook on the company.
In Q3 2022, Best Buy Co., Inc. (NYSE:BBY) posted an EPS of $1.38 and revenue of $10.59 billion, beating estimates by $0.36 and $290 million, respectively. The company had $932 million available in cash and cash equivalents at the end of the quarter and its total assets amounted to $17 billion.
Wedbush lifted its price target on Best Buy Co., Inc. (NYSE:BBY) to $85 in November with a Neutral rating on the shares, appreciating the company's Q3 earnings, its guidance, and overall performance this year.
Best Buy Co., Inc. (NYSE:BBY) was a part of 31 hedge fund portfolios in Q3 2022, growing from 26 in the previous quarter, as per Insider Monkey's data. The stakes owned by these funds have a total value of $296.8 million.
Ford Motor Company (NYSE:F) is an American multinational automobile company that sells automobiles and commercial vehicles. In October, Morgan Stanley maintained an Overweight rating and a $14 price target on the stock, appreciating the company's strong cash generation.
Cramer's Charitable Trust owns shares of Ford Motor Company (NYSE:F) and the analyst gave the stock his stamp of approval in September due to its high dividend yield.
In the third quarter of 2022, Ford Motor Company's (NYSE:F) cash position remained stable. Its operating cash flow for the quarter came in at $3.8 billion and it generated $3.6 billion in free cash flow. The company's revenue came in at $37.2 billion, which showed a 12% growth from the same period last year.
Ford Motor Company (NYSE:F) currently pays a quarterly dividend of $0.15 per share, having raised it by 50% in July. The stock's dividend yield on December 2 came in at 4.33%.
In addition to Carlisle Companies Incorporated (NYSE:CSL), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO), Ford Motor Company (NYSE:F) is also a prominent dividend stock to consider.
As of the close of Q3 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Ford Motor Company (NYSE:F), up from 46 in the previous quarter. The collective value of these stakes is nearly $1.2 billion. Fisher Asset Management owned the largest stake in the company, worth over $503.6 million.
Leaven Partners mentioned Ford Motor Company (NYSE:F) in its third-quarter 2022 investor letter. Here’s what the firm said:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
