Best Dividend Stocks According To Jim Cramer

In this article, we discuss the 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.

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.

Best Dividend Stocks According To Jim Cramer

7. Best Buy Co., Inc. (NYSE:BBY)

Dividend Yield as of December 2: 4.06%

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. 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. 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. 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.

6. Ford Motor Company (NYSE:F)

Dividend Yield as of December 2: 4.33%

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 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 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, Medtronic plc (NYSE:MDT), and The Coca-Cola Company, Ford Motor Company 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, 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 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%.”

5. KeyCorp (NYSE:KEY)

Dividend Yield as of December 2: 4.42%

KeyCorp (NYSE:KEY) is an American retail banking company that provides financial services to retail, small businesses, and other clients. In Q3 2022, the company reported revenue of $1.89 billion, which showed a 4% growth from the prior-year period. Its management also approved the remaining $790 million existing share repurchase authorization during the quarter.

Cramer believes that bank stocks can replace tech companies and can be the new market leaders. He recommended KEY due to the bank’s high dividend yield, which is rewarding for investors in the current market.

KeyCorp is one of the best dividend stocks on our list as it raised its dividend for the 12th consecutive year on November 17. Moreover, its five-year dividend CAGR came in at 16.72%. The company currently pays a quarterly dividend of $0.205 per share and has a dividend yield of 4.42%, as of December 2.

In October, Morgan Stanley maintained an Equal Weight rating on KeyCorp with a $22 price target, appreciating the company’s fund loan growth.

As per Insider Monkey’s Q3 2022 database, 33 hedge funds owned stakes in KeyCorp, down from 37 in the previous quarter. These stakes are collectively worth over $454.3 million. With 6.3 million shares, Adage Capital Management was the company’s largest stakeholder in Q3.

3. ONEOK, Inc. (NYSE:OKE)

Dividend Yield as of December 2: 5.57%

ONEOK, Inc. (NYSE:OKE) is another dividend stock that is recommended by Jim Cramer in the current market situation. It is an American natural gas transmission company. Cramer holds a positive stance on the energy sector and highlighted the company’s high dividend yield. In Q3 2022, the company reported revenue of roughly $6 billion, which is up 30.3% from the same period last year. Its net income for the quarter came in at $431.8 million, which showed a 10% increase from the prior-year period.

ONEOK, Inc. offers over 25 years of dividend stability and has raised its dividends at a CAGR of 13% from 2000 to 2021. The company’s consistent dividends and strong cash make it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.935 per share and has a dividend yield of 5.57%, as of December 2.

In October, Morgan Stanley maintained an Equal Weight rating on ONEOK, Inc. with a $70 price target.

As of the close of Q3 2022, 29 hedge funds tracked by Insider Monkey owned stakes in ONEOK, Inc., compared with 30 in the previous quarter. These stakes are worth $225 million collectively.

2. Devon Energy Corporation (NYSE:DVN)

Dividend Yield as of December 2: 7.57%

Devon Energy Corporation (NYSE:DVN) engages in the exploration of hydrocarbons. The company reported a strong cash position in Q3 2022, generating $1.5 billion in free cash flow and $2.1 billion in operating cash flow. Moreover, its revenue of $5.43 billion showed a 56.5% growth from the same period last year.

Devon Energy Corporation is currently a part of Cramer’s Charitable Trust. He holds a positive view of the company because of its strong dividend policy and solid dividend yield. He also recommended the stock with respect to Morgan Stanley’s ‘Year of the Yield’ report, mentioning that DVN can generate solid cash for shareholders if oil prices remain above $75 per barrel.

Devon Energy Corporation has been making consistent dividend payments to shareholders for the past 29 years, coming through as one of the best dividend stocks on our list. The company pays a quarterly dividend of $1.35 per share and has a dividend yield of 7.57%, as of December 2.

Devon Energy Corporation was a part of 51 hedge fund portfolios in Q3 2022, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $1.5 billion.

GoodHaven Capital Management mentioned Devon Energy Corporation in its Q2 2022 investor letter. Here is what the firm has to say:

“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

You can also take a look at 10 Best Small-Cap Dividend Stocks to Buy Now and 11 High Dividend Stocks Picked By Billionaire Gabelli

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This article is originally published at Insider Monkey.