Jim Cramer’s 5 Favorite Dividend Aristocrats

In this article, we discuss Jim Cramer’s 5 favorite dividend aristocrats. If you want to see more stocks in this selection, check out Jim Cramer’s Favorite Dividend Aristocrats. 

5. Chubb Limited (NYSE:CB)

Number of Hedge Fund Holders: 41

Dividend Yield as of December 16: 1.56%

Chubb Limited (NYSE:CB) is a global provider of insurance products such as property and casualty, accident and health, reinsurance, and life insurance. The company was incorporated in 1985 and is headquartered in Zurich, Switzerland. Jim Cramer said on the August 30 Mad Money segment that Chubb Limited (NYSE:CB) benefits from soaring interest rates, and it is positioned to rally since the Fed is expected to remain hawkish. He told viewers: 

“With the Fed bringing the pain, I think rates will head higher again, and that means Chubb is going to be along for the ride.”

He also backed the stock on May 6, 2022, telling his audience:

“Chubb is a great company.”

On November 17, Chubb Limited (NYSE:CB) declared a quarterly dividend of $0.83 per share, in line with previous. The dividend is payable on January 6, 2023 to shareholders of record on December 16. In 2022, Chubb achieved its 29th consecutive year of dividend growth and it is one of Jim Cramer’s favorite dividend aristocrats. 

According to Insider Monkey’s data, 41 hedge funds were bullish on Chubb Limited (NYSE:CB) at the end of the third quarter of 2022, compared to 35 funds in the last quarter. Andreas Halvorsen’s Viking Global is the leading stakeholder of the company, with 3.6 million shares worth $653.5 million. 

Here is what Aristotle Capital Management Value Equity has to say about Chubb Limited (NYSE:CB) in its Q1 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.”

4. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 43

Dividend Yield as of December 16: 2.08%

Caterpillar Inc. (NYSE:CAT) is an Illinois-based company that manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Jim Cramer, on August 30, told his viewers that Caterpillar Inc. (NYSE:CAT) shares have rebounded from their July lows, but they aren’t near their April highs. He explained further:

“CAT should get a huge boost from recent legislation, and with the stock down at 15 times earnings, I’m betting Wall Street’s gotten too negative on Caterpillar.”

On December 14, Cramer reinforced his support for Caterpillar, calling it an undervalued stock that investors are ignoring. He also said that he does not discount industrial stocks in 2023, and neither does he expect next year to bring a bear market. 

Caterpillar Inc. (NYSE:CAT) on December 15 declared a $1.20 per share quarterly dividend, in line with previous. The dividend is distributable on February 17, 2023 to shareholders of record on January 20. Caterpillar Inc. (NYSE:CAT) has paid increasing annual dividends to shareholders for 29 consecutive years. 

According to Insider Monkey’s data, 43 hedge funds were long Caterpillar Inc. (NYSE:CAT) at the end of Q3 2022, compared to 45 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 7.35 million shares worth $1.20 billion. 

In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:

“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. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 53

Dividend Yield as of December 16: 2.24%

McDonald’s Corporation (NYSE:MCD) is another dividend aristocrat that Jim Cramer favors. He observed that there were two recent overhangs on the shares, cost inflation and the strength of the U.S. dollar. However, these overhangs are behind McDonald’s Corporation (NYSE:MCD) now. Calling it the perfect “bounce-back candidate”, he explained on the August 30 segment of Mad Money:

“I think McDonald’s can resume its long march higher real soon.” 

On October 14, McDonald’s Corporation (NYSE:MCD) declared a $1.52 per share quarterly dividend, a 10.1% increase from its prior dividend of $1.38. The dividend was paid to shareholders on December 15. McDonald’s has increased its dividend for 46 consecutive years, and it’s well on its way to becoming a dividend king. 

According to Insider Monkey’s Q3 data, 53 hedge funds were long McDonald’s Corporation (NYSE:MCD), compared to 50 funds in the last quarter. Ray Dalio’s Bridgewater Associates held the leading position in the company, comprising over 2 million shares worth $487.7 million. 

2. Linde plc (NYSE:LIN)

Number of Hedge Fund Holders: 56

Dividend Yield as of December 16: 1.41%

Linde plc (NYSE:LIN) is a global multinational chemical company that offers atmospheric gasses, including oxygen, nitrogen, and argon, rare gasses, and processed gasses like carbon dioxide, helium, hydrogen, and acetylene. On August 30, Cramer told viewers that his Charitable Trust owns shares of Linde plc (NYSE:LIN). While it’s a difficult phase for cyclical companies, he said he believes Linde plc (NYSE:LIN) has a “great long-term story” and is worth buying on the dip.

He was a Linde plc (NYSE:LIN) bull back in February 2022 as well, telling his audience in a Lightning Round: 

“I was upset that Linde was down so much … The company had an unbelievable quarter, the business is incredibly strong, industrial gasses are a great business. Why the hell the stock is now down so much, I agree with you, I think it’s a buy.”

According to Insider Monkey’s data, Linde plc (NYSE:LIN) was part of 56 hedge fund portfolios at the end of the third quarter of 2022, compared to 48 in the prior quarter. Ian Simm’s Impax Asset Management is the biggest stakeholder of the company, with 3 million shares worth $817 million. 

ClearBridge Investments made the following comment about Linde plc (NYSE:LIN) in its Q3 2022 investor letter:

“Seeing better opportunities elsewhere in the materials sector, we exited our position in Ecolab and added to copper producer Freeport-McMoRan (FCX), which supplies a much-needed resource for the energy transition, and specialty chemical company Linde plc (NYSE:LIN), which has historically held onto pricing gains it has achieved following increases in energy costs. We think this pricing power should protect profitability during the acute inflationary phase and potentially lead to margin expansion when cost pressures abate. Linde also continues to be well-positioned on hydrogen and carbon capture with contract-backed project capex likely accelerating in the medium term as the recently passed Inflation Reduction Act rolls out.”

1. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 59

Dividend Yield as of December 16: 2.79%

The Coca-Cola Company (NYSE:KO) is one of Jim Cramer’s favorite dividend aristocrats. He called it a “textbook defensive stock” on his CNBC show on August 30, noting that its 2.8% dividend yield helps add protection. He observed that although shares of The Coca-Cola Company (NYSE:KO) have been flat over the last six months, Fed Chair Jerome Powell’s reminder that the central bank will continue rate hikes should boost the stock.

Jim Cramer reiterated his optimistic view on The Coca-Cola Company (NYSE:KO) on October 25, noting that the stock could go into the $60 dollar range after a strong third quarter. He observed that the international scale of The Coca-Cola Company (NYSE:KO) has helped keep the impact of inflation at bay. The company paid a $0.44 per share quarterly dividend to shareholders on December 15, and 2022 marked its 60th consecutive annual dividend increase. 

According to Insider Monkey’s data, 59 hedge funds were bullish on The Coca-Cola Company (NYSE:KO) at the end of Q3 2022, compared to 60 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with 400 million shares worth $22.40 billion. 

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:

“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (The Coca-Cola Company (NYSE:KO)). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”

You can also take a look at 10 Best BDC Stocks To Buy and 16 Large-Cap Stocks with Insider Buying.