In this article, we will look at the 10 favorite dividend aristocrats of journalist investor, Jim Cramer.
Jim Cramer thinks that owning high-yielding dividend stocks as we head into the back half of 2022 is investors’ best bet, given that the Fed is “committed to bringing the pain” and dividend aristocrats can “try to protect you from the ugliness of a bear market”. The former hedge fund manager shared a list of his 10 favorite dividend aristocrats to own for the last four months of 2022.
On August 30, The journalist investor spoke about how he thinks the Fed’s hawkish stance at Jackson Hole will have long-lasting repercussions on the market. Jim Cramer commented that Jerome Powell had “a Volker moment” at his Jackson Hole speech.
Jim Cramer broke down what the Fed needs to see in order to stop raising interest rates. Cramer noted that one of the most important things that the Fed needs to see before it stops tightening is “a peak in wage growth and a peak in hiring”, as it needs to “stop wages from growing”. Here is what the journalist investor said:
“Here’s though what I think is Powell really after and it is, as I said, it’s a tough spot. From the Fed’s perspective, the most important thing is to prevent a wage-price spiral, a vicious cycle where rising wages lead to rising prices, which in turn leads to rising wages again and so on, it’s a reverberation…”
Jim Cramer noted that the Fed has the following choices to go about its inflation problem:
“Fiercely dump longer-term bonds to raise mortgage rates, or boost the short-term federal fund’s rate, or both. The combination would expand the cost of borrowing money dramatically. Once the Fed does that, many people curtail their spending plans and businesses will postpone their expansion plans. Any company that needs financing will have a very hard time finding it, and businesses will stop competing with each other for workers. That would end the job hop and the job hop is behind so much of the wage inflation…”
Jim Cramer said that after Jackson Hole, the Fed “means business”. The journalist investor then gave his opinion on what to own in the back half of 2022, if the Fed remains hawkish. Here is what he said:
“If you have stocks of companies that have great balance sheets and plenty of cash, I’m not worried about you. You’ll do just fine. (If you own) companies with high dividends that give you big yields, you’ll do well. But if you own the stocks of companies that are losing money, Powell’s message to you is: start selling now, before he closes the door on their funding entirely.”
Some of Jim Cramer’s top favorite dividend aristocrats to own for the rest of 2022 include General Dynamics Corporation (NYSE:GD), Caterpillar Inc. (NYSE:CAT), and The Coca-Cola Company (NYSE:KO).
Our Methodology
We reviewed Jim Cramer’s list of his 10 favorite dividend aristocrats and looked up their forward dividend yields. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, the stock’s dividend yield, and why it is one of Jim Cramer’s favorites. We have ranked these stocks in increasing order of their dividend yields.
Jim Cramer’s 10 Favorite Dividend Aristocrats
10. Linde plc (NYSE:LIN)
Number of Hedge Fund Holders: 48
Dividend Yield as of September 12: 1.63%
Jim Cramer disclosed owning shares of Linde plc (NYSE:LIN) via his charitable trust. He is bullish on the stock’s long-term growth story. As of September 12, Linde plc (NYSE:LIN) is offering a forward dividend yield of 1.63% and has free cash flows of $6.8 billion to support it. The company has been growing its dividends for the past 29 years and has a 5-year dividend CAGR of 8.25% and a payout ratio of 38.6%.
On August 10, Stifel analyst Andreas Heine raised his price target on Linde plc (NYSE:LIN) to EUR 349 from EUR 257 and upgraded the stock to Buy from Hold.
Linde plc (NYSE:LIN) is on track to power the world with green hydrogen. On September 8, the company announced that it is building a 35-megawatt Proton Exchange Membrane to produce green hydrogen in New York. The company’s hydrogen plant is expected to be operational by 2025.
At the end of the second quarter of 2022, 48 hedge funds were long Linde plc (NYSE:LIN) and held stakes worth $3.25 billion in the company. Of those, Impax Asset Management was the leading shareholder with stakes worth $813.6 million.
Here is what investment management firm, ClearBridge Investments, had to say about Linde plc (NYSE:LIN) in its second-quarter 2022 investor letter:
“The replacement of demand for Russian gas with green hydrogen positions Linde (NYSE:LIN) well. Green hydrogen, made by using renewable energy to split water into its basic elements, hydrogen and oxygen, and subsequently cleanly burn the hydrogen as fuel, is seen as key to lowering emissions in hard-to-decarbonize industries such as steel and cement, as well as transport. In 2021 Linde announced a long-term agreement to provide European semiconductor maker Infineon (OTCQX:IFNNY) with onsite production and storage of green hydrogen for the company’s site in Villach, Austria. Securing a clean, domestic source of energy for semiconductor manufacturing appears strategic today amid heightened concerns of reliable supply from Taiwan.”
9. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 35
Dividend Yield as of September 12: 1.69%
Chubb Limited (NYSE:CB) is a leading global provider of property & casualty, accident & health, reinsurance, and life insurance products. Given the Fed’s hawkish tone, Cramer is bullish on Chubb Limited as he sees the insurance company will benefit from high interest rates. As of September 12, Chubb Limited has gained 7.4% over the past twelve months.
On August 11, Chubb Limited declared a quarterly cash dividend of $0.83 per share. The dividend is payable on October 7 to shareholders of record on September 16. As of September 12, Chubb Limited is offering a forward dividend yield of 1.69% and has free cash flows of over $11 billion to support it.
This July, Jefferies analyst Yaron Kinar revised his price target on Chubb Limited to $244 from $247 and maintained a Buy rating on the shares.
At the close of Q2 2022, 35 hedge funds were bullish on Chubb Limited and held stakes worth $1.68 billion in the company. As of June 30, Viking Global owns over 3.7 million shares of Chubb Limited and is the largest shareholder in the company. The investment covers 3.39% of Andreas Halvorsen’s 13F portfolio.
Here is what Aristotle Capital Management had to say about Chubb Limited in its first-quarter 2022 investor letter:
“Our investment in Chubb began in the fourth quarter of 2015, shortly after ACE Limited announced it would acquire the Chubb Corporation, creating the largest global property and casualty insurance company by underwriting income. During our nearly seven-year holding period, the company’s combination progressed leading to the realization of main catalysts we had identified. These included cost savings, broadened product offerings and an expanded customer base, as well as enhanced distribution capabilities and improved pricing due to scale. In addition, Chubb successfully grew its profitable high-net-worth personal lines. While we still consider Chubb to be a high-quality business, few catalysts remain after what was, in our opinion, a remarkable run of successful business execution. As such, we decided to step aside in favor of what we believe to be a more optimal investment in Blackstone.”
8. Archer Daniels Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 42
Dividend Yield as of September 12: 1.75%
Jim Cramer named Archer Daniels Midland Company (NYSE:ADM) among his top favorite dividend aristocrats and noted that the stock is currently undervalued and offers strong dividend payouts. Cramer said that the stock has started rebounding from its bottoms, aided by rising crop prices. As of September 12, Archer Daniels Midland Company has gained 29.9% year to date.
Archer Daniels Midland Company has a track record of growing its dividends for more than 25 years. As of September 12, the stock is offering a forward dividend yield of 1.75% and the company has free cash flows of more than $1.6 billion. The company has a 5-year dividend CAGR of 4.50% and a payout ratio of 23.6%.
This August, Wolfe Research analyst Sam Margolin initiated coverage of Archer Daniels Midland Company with a buy-side Outperform rating and a $117 price target. The analyst noted that the stock offers a “highly competitive dividend”.
At the end of the second quarter of 2022, 42 hedge funds were eager on Archer Daniels Midland Company and held stakes worth roughly $659 million in the company. This is compared to 42 positions in the previous quarter with stakes worth $625.6 million.
As of June 30, Markel Gayner Asset Management is the top shareholder in Archer Daniels Midland Company and has stakes worth $113.5 million in the company.
Here is what Diamond Hill Capital had to say about Archer-Daniels-Midland Company in its first-quarter 2022 investor letter:
“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.”
7. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 50
Dividend Yield as of September 12: 2.13%
Jim Cramer thinks McDonald’s Corporation is the “perfect bounce back candidate” and named it among his top 10 dividend aristocrats to own for the rest of 2022. As of September 12, McDonald’s Corporation is offering a forward dividend yield of 2.13%, which the company backs with free cash flows of more than $6 billion.
On July 26, McDonald’s Corporation announced earnings for the second quarter of fiscal 2022. The fast food giant reported earnings per share of $2.55 and beat EPS estimates by $0.08. The company generated a revenue of $5.72 billion for the quarter. As of September 12, shares of McDonald’s Corporation have gained 15% over the past six months.
Wall Street is bullish on McDonald’s Corporation. On September 7, Piper Sandler analyst Nicole Miller Regan raised her price target on McDonald’s Corporation to $270 from $263 and maintained a buy-side Overweight rating on the shares. This September, Bernstein analyst Danillo Gargiulo initiated coverage of McDonald’s Corporation with a Market Perform rating and a $267 price target.
At the end of the second quarter of 2022, 50 hedge funds were long McDonald’s Corporation with stakes worth $2.30 billion in the company. Of those, Bridgewater Associates was the top shareholder with stakes worth $511.4 million. The investment covers 2.16% of Ray Dalio’s 13F portfolio.
Like General Dynamics Corporation, Caterpillar Inc., and The Coca-Cola Company, Cramer is bullish on McDonald’s Corporation for the rest of 2022.
6. Hormel Foods Corporation (NYSE:HRL)
Number of Hedge Fund Holders: 27
Dividend Yield as of September 12: 2.21%
Jim Cramer likes Hormel Foods Corporation (NYSE:HRL) and said that amid surging inflation, the stock is “a good trade-down play”. Hormel Foods Corporation has a 5-year dividend CAGR of 9.37% and a payout ratio of 56%. As of September 12, the stock is offering a forward dividend yield of 2.21% and the company has free cash flows of more than $1 billion.
On September 1, Hormel Foods Corporation reported earnings for the third quarter of fiscal 2022. The company reported a revenue of $3.03 billion, up 6% year over year, and ahead of Wall Street consensus by $32.27 million. Shares of Hormel Foods Corporation have rallied 10.3% over the past twelve months, as of September 12.
Shortly after its earnings release, Piper Sandler analyst Michael Lavery adjusted his price target on Hormel Foods Corporation to $47 from $48 and remained Neutral on the shares.
At the close of Q2 2022, 27 hedge funds held stakes in Hormel Foods Corporation worth $434.5 million. As of June 30, Renaissance Technologies owns over 2.9 million shares of Hormel Foods Corporation and is the largest investor in the company. The investment covers 0.16% of Jim Simons’ 13F portfolio.
5. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 42
Dividend Yield as of September 12: 2.24%
Cramer likes General Dynamics Corporation and sees the stock benefitting from the political turmoil in Europe. He is confident about the company’s leadership that “knows what’s needed in a less secure world”. General Dynamics Corporation boasts a track record of 27 consecutive years of growing its dividends and has a 5-year dividend CAGR of 8.90%, with a payout ratio of 41.5%.
On August 3, General Dynamics Corporation declared a quarterly cash dividend of $1.26 per share. The dividend is payable on November 10 to investors of record at the close of business on October 7. As of September 12, the stock is offering a forward dividend yield of 2.24% and the company has free cash flows of $4.83 billion.
This August, RBC Capital analyst Ken Herbert initiated coverage of General Dynamics Corporation with a $275 price target and an Outperform rating. The analyst noted that investing in General Dynamics Corporation is investing in “a leading global brand at an attractive valuation”.
At the end of the second quarter of 2022, 42 hedge funds were long General Dynamics Corporation with stakes worth $7.7 billion. As of June 30, Longview Asset Management owns over 30 million shares of General Dynamics Corporation and is the largest shareholder in the company.
Here is what Oakmark Fund had to say about General Dynamics Corporation in its second-quarter 2022 investor letter:
“Finally, General Dynamics Corporation (NYSE:GD)’s defense business enabled the stock to resist the bear market’s downward pressure. We eliminated the position to fund more attractive holdings.”
4. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 45
Dividend Yield as of September 12: 2.63%
Jim Cramer is bullish on Caterpillar Inc. and noted that the stock is undervalued. As of September 12, Caterpillar Inc. has a trailing twelve-month PE ratio of 15.4 and is offering a forward dividend yield of 2.63%, which the company supports with free cash flows of more than $3 billion.
On August 2, Caterpillar Inc. announced earnings for the second quarter of fiscal 2022. The company reported earnings per share of $3.18 and beat EPS estimates by $0.16. The company’s revenue for the quarter amounted to $14.25 billion, up 10.5% year over year.
On August 31, Baird analyst Mircea Dobre reiterated his buy-side Outperform rating and $224 price target on Caterpillar Inc..
At the close of Q2 2022, 45 hedge funds held stakes in Caterpillar Inc. worth 3.25 billion. Of those, Fisher Asset Management was the leading shareholder with stakes of roughly $1.34 billion. The investment covers 0.94% of Ken Fisher’s 13F portfolio.
Here is what Diamond Hill Capital had to say about Caterpillar Inc. in its first-quarter 2022 investor letter:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
3. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
Dividend Yield as of September 12: 2.84%
The Coca-Cola Company is a “textbook defensive stock” according to Jim Cramer. The journalist investor thinks the stock offers protection for investors in a slowing economy. The Coca-Cola Company has been growing its dividends for roughly 60 years and boasts a 5-year dividend CAGR of 3.62% and a payout ratio of 70.5%.
On July 21, The Coca-Cola Company declared a quarterly cash dividend of $0.44 per share of the company’s common stock. The dividend is payable on October 3 to investors of record on September 16. As of September 12, the stock is offering a forward dividend yield of 2.84%, which the company backs with free cash flows of $10 billion.
On July 26, The Coca-Cola Company announced earnings for the second quarter of fiscal 2022. The company reported earnings per share of $0.70 and beat estimates by $0.03. The company generated a revenue of $11.3 billion and beat expectations by $737 million.
This September, HSBC analyst Carlos Laboy raised his price target on The Coca-Cola Company to $76 from $72 and reiterated a Buy rating on the shares. The analyst noted that the company has new revenue drivers in Latin American markets.
At the close of Q2, 60 hedge funds were bullish on The Coca-Cola Company with stakes worth $28.3 billion. As of June 30, Berkshire Hathaway owns 400 million shares of The Coca-Cola Company and is the largest investor in the company. The investment covers 8.38% of Warren Buffett’s 13F portfolio.
2. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Holders: 24
Dividend Yield as of September 12: 4.26%
Jim Cramer likes Federal Realty Investment Trust (NYSE:FRT) because of the REIT’s portfolio of mixed-use suburban properties, which the journalist investor sees as recession-proof. Cramer also noted that he likes the stock’s dividend yield, which as of September 12, sits at 4.26%.
On August 4, Federal Realty Investment Trust announced earnings for the fiscal second quarter of 2022. The company reported funds from operations of $1.65 and beat expectations by $0.16. The company’s revenue for the quarter amounted to $286.8 million, up 14.3% year over year, and outperformed Wall Street estimates by $13 million.
Shortly after its earnings release, Federal Realty Investment Trust declared a quarterly cash dividend of $1.08 per share up 1% from its prior dividend of $1.07. The dividend is payable on October 17 to shareholders of record on September 22.
On August 22, Truist analyst Ki Bin Kim revised his price target on Federal Realty Investment Trust to $120 from $125 and maintained a Hold rating on the shares.
At the end of the second quarter of 2022, 24 hedge funds were long Federal Realty Investment Trust and held stakes worth $199.8 million in the company.
1. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 19
Dividend Yield as of September 12: 4.45%
Jim Cramer is bullish on the monthly dividend company Realty Income Corporation (NYSE:O) because the REIT’s primary clients include drugstores, departmental stores, and dollar stores among others. He likes the stock’s high dividend yield, which as of September 12 sits at 4.45%.
On August 16, Realty Income Corporation declared a monthly cash dividend of $0.2475 per share. The dividend is payable on September 15 to investors of record at the close of business on September 1. As of September 12, Realty Income Corporation has free cash flows of roughly $2 billion to support its monthly dividends.
Wall Street is bullish on Realty Income Corporation. On June 22, Credit Suisse analyst Tayo Okusanya initiated coverage of Realty Income Corporation with a buy-side Outperform rating and a $75 price target. On June 30, Jefferies analyst Jonathan Petersen revised his price target on Realty Income Corporation to $78 from $81 and maintained a Buy rating on the shares.
At the end of Q2, 19 hedge funds were eager on Realty Income Corporation and held stakes worth $200.7 million in the company. Of those, Zimmer Partners was the most prominent investor with stakes worth $51 million.
You can also take a look at Jim Cramer’s Top 10 Stock Picks for 2022 and 10 Best Jim Cramer Stocks To Buy Today.
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This article is originally published at Insider Monkey.
