Jim Cramer’s Favorite Dividend Aristocrats
In this article, we discuss Jim Cramer’s favorite dividend aristocrats. If you want to see more stocks in this selection, check out Jim Cramer's 5 Favorite Dividend Aristocrats.
Jim Cramer, the host of Mad Money on CNBC and an anchor on Squawk on the Street, is one of the most followed television personalities commenting on Wall Street equities. At the end of August this year, Cramer put out a list of his 10 favorite “dividend aristocrats” to buy and hold throughout 2022, noting that their dividend payouts provide a safe haven against Federal Reserve policies and consequent market declines. Cramer observed that dividend aristocrats, which are members of the S&P 500 Index with a history of increasing dividends consistently for at least 25 years, have fared better than the broader U.S. stock index.
On December 16, Cramer attempted to address the primary investor concern regarding the United States slipping into a recession in the coming year. He told his viewers on Mad Money:
“We want the Fed to talk a big game, without needing to actually do too much. Talk is better than action. We want [Fed Chair Jerome Powell] to scare the economy into slowing under its own weight. We don’t want endless rate hikes ... that will destroy everything in its path.”
Jim Cramer made these comments in light of the Fed raising interest rates by half a percentage point to their highest levels in 15 years on December 14. The S&P 500 was also down 5.6% in December, continuing its losing streak for weeks. In this market environment, some of the dividend aristocrats favored by Jim Cramer for 2022 include The Coca-Cola Company (NYSE:KO), Caterpillar Inc. (NYSE:CAT), and McDonald's Corporation (NYSE:MCD).
Our Methodology
We explored the 10 dividend aristocrats that Jim Cramer listed as his favorites on an August 30 segment of CNBC’s Mad Money. We have also mentioned the comments he made about these stocks after August 30, to see whether he stands by his original bullish thesis for all these names. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Jim Cramer's Favorite Dividend Aristocrats
10. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Holders: 24
Dividend Yield as of December 16: 4.13%
Federal Realty Investment Trust (NYSE:FRT) is a leader in the ownership and operation of high quality retail properties located in primary coastal markets ranging from Washington to Boston, as well as San Francisco and Los Angeles. Federal Realty Investment Trust (NYSE:FRT) aims to distribute long-term, sustainable growth through investing in areas where retail demand outpaces supply.
CNBC’s Jim Cramer said in an episode of Mad Money on August 30 that the REIT yields about 4.2% and owns huge suburban retail properties. The reason Federal Realty Investment Trust (NYSE:FRT) featured as one of Cramer’s favorite dividend aristocrats was because the kind of properties it owns and leases remain resilient despite economic weakness. On September 14, Jim Cramer reiterated his support for Federal Realty Investment Trust (NYSE:FRT), saying:
“While most retail stocks are horrible right now … the companies that own the best retail real estate are doing just fine.”
On November 3, Federal Realty Investment Trust (NYSE:FRT) reported a Q3 FFO of $1.59 and a revenue of $273.45 million, outperforming Wall Street estimates by $0.06 and $12.29 million, respectively. The company raised its full-year 2022 earnings per diluted share guidance to $3.88-$3.93 and increased full-year FFO per diluted share guidance to $6.27 - $6.32 from the prior outlook of $6.10-$6.25 and a $6.21 consensus.
According to Insider Monkey’s data, 24 hedge funds reported owning stakes worth $132 million in Federal Realty Investment Trust (NYSE:FRT) at the end of Q3 2022, compared to the same number of funds in the prior quarter worth $200 million.
Like The Coca-Cola Company (NYSE:KO), Caterpillar Inc. (NYSE:CAT), and McDonald's Corporation (NYSE:MCD), Federal Realty Investment Trust (NYSE:FRT) is one of the dividend aristocrats backed by Jim Cramer.
9. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 28
Dividend Yield as of December 16: 4.61%
Realty Income Corporation (NYSE:O) is an S&P 500 company that seeks to deliver shareholders with dependable monthly income. It is a California-based company that invests in free-standing, single-tenant commercial properties in the United States, Spain, and the United Kingdom which are subject to NNN Leases. Cramer noted on an August 30 Mad Money segment that:
“The stock’s been punished lately because most retail has been struggling.”
He observed that Realty Income Corporation (NYSE:O) has “tons of consistent clients” like drugstores, supermarkets, dollar stores, and convenience stores. He further added:
“Best of all, Realty Income pays you a monthly dividend that yields 4.3% here.”
Supporting Realty Income Corporation (NYSE:O) further, he said on a September 14 segment of Mad Money:
“As long as their tenants stay in business, they won’t take much of a hit financially. To me, that looks like an opportunity.”
On December 13, Realty Income Corporation (NYSE:O) declared a $0.2485 per share monthly dividend, a 0.2% increase from its prior dividend of $0.248. The dividend is payable on January 13, 2023 to shareholders of record on January 3. The forward yield was 4.60%. The firm has a history of increasing dividend payouts for 28 consecutive years.
According to Insider Monkey’s data, Realty Income Corporation (NYSE:O) was part of 28 hedge fund portfolios at the end of Q3 2022, up from 19 in the prior quarter. Stuart J. Zimmer’s Zimmer Partners is the largest position holder in the company, with 2.90 million shares worth $169 million.
8. Hormel Foods Corporation (NYSE:HRL)
Number of Hedge Fund Holders: 29
Dividend Yield as of December 16: 2.41%
Hormel Foods Corporation (NYSE:HRL) was founded in 1891 and is headquartered in Austin, Minnesota. The company develops, processes, and distributes meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments – Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. Jim Cramer said on his Mad Money segment on August 30 that Hormel Foods Corporation (NYSE:HRL) is a classic defensive name, noting that as inflation crushed consumers, Hormel could be “a good trade-down play.”
On December 1, Cramer was in conversation with Hormel Foods Corporation (NYSE:HRL)’s CEO, discussing the company's negative Q4 organic volume growth and the recent dividend increase. The CEO reassured Cramer that the company is dedicated to protecting and increasing its dividend payouts, which may not look huge, but it has consistently increased payouts for the last 57 years. Hormel also has a fortress balance sheet and the negative growth is easily compensated by the strong cash position and dividend growth. Hormel Foods Corporation (NYSE:HRL) still remains one of Cramer’s favorite dividend aristocrats.
Hormel Foods Corporation (NYSE:HRL) on November 21 declared a quarterly dividend of $0.275 per share, a 5.8% increase from its prior dividend of $0.26. The dividend is distributable on February 15, 2023 to shareholders of record on January 17.
According to Insider Monkey’s data, 29 funds reported owning stakes worth $455.8 million in Hormel Foods Corporation (NYSE:HRL) at the end of September 2022, compared to 27 funds in the earlier quarter worth $434.5 million. Jim Simons’ Renaissance Technologies is the leading position holder in the company, with 2.3 million shares worth $106.3 million.
Here is what LRT Capital Management has to say about Hormel Foods Corporation (NYSE:HRL) in its Q3 2021 investor letter:
“Hormel Foods Corporation (HRL) – the maker of SPAM and Applegate Turkey (among many other products), is down over 20% since peaking last year, largely on fears of higher cost. We expect the company will be able to raise prices to offset cost inflation as they have always been able to win their past.”
7. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 35
Dividend Yield as of December 16: 2.06%
General Dynamics Corporation (NYSE:GD) was founded in 1899 and is headquartered in Reston, Virginia. It operates as an aerospace and defense company worldwide, and it has four segments – Aerospace, Marine Systems, Combat Systems, and Technologies. On Mad Money’s August-end segment, Jim Cramer said that he is optimistic about the defense industry overall, but General Dynamics Corporation (NYSE:GD) is the only dividend aristocrat in the sector. He told viewers:
“Unfortunately, they also have a business jet division that will no doubt get hit if we have a nasty recession, but that hasn’t stopped the stock from rallying 11% this year, aided by a very hands-on management that knows what’s needed in a less secure world.”
Cramer also backed General Dynamics Corporation (NYSE:GD) in a May 2020 segment of Mad Money, saying:
“You have to take a long view on GD ’cause it’s not the favorite one right now. It’s not the loved one and the whole group is a little under pressure, but I think General Dynamics is a very good long-term hold.”
On December 7, General Dynamics Corporation (NYSE:GD) declared a $1.26 per share quarterly dividend, in line with previous. The dividend is payable on February 10, 2023 to shareholders of record on January 20. The quarterly dividend was increased by 6% in 2022 to stretch General Dynamics’ dividend hike streak to 26 years.
According to Insider Monkey’s data, General Dynamics Corporation (NYSE:GD) was part of 35 hedge fund portfolios at the end of September 2022, compared to 42 in the prior quarter. James A. Star’s Longview Asset Management is the leading position holder in the company, with 30 million shares worth $6.4 billion.
Here is what Oakmark Global Fund has to say about General Dynamics Corporation (NYSE:GD) in their Q1 2021 investor letter:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated products. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
6. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 37
Dividend Yield as of December 16: 1.73%
Archer-Daniels-Midland Company (NYSE:ADM) procures, transports, processes, and merchandises agricultural commodities in the United States, Switzerland, Cayman Islands, Brazil, Mexico, the United Kingdom, and internationally. The company operates through three segments – Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Jim Cramer told viewers on August 30 that he likes Archer-Daniels-Midland Company (NYSE:ADM) and the potential upside from supply chain disruptions. He also said that the stock has started to rebound from its mid-July bottom, driven by a recovery in crop prices. He called it a “conservative, decent stock.”
Jim Cramer reinforced his prior Archer-Daniels-Midland Company (NYSE:ADM) thesis on a December 14 segment of Mad Money, saying that the stock is the best performer in consumer staples space so far this year, and is a winner as long as the Russia-Ukraine war continues. He categorized it as one of the top five consumer staple stocks for 2023.
According to Insider Monkey’s Q3 data, 37 hedge funds were long Archer-Daniels-Midland Company (NYSE:ADM), compared to 42 funds in the earlier quarter. Tom Gayner’s Markel Gayner Asset Management is the leading position holder in the company, with nearly 1.5 million shares worth $117.7 million.
In addition to The Coca-Cola Company (NYSE:KO), Caterpillar Inc. (NYSE:CAT), and McDonald's Corporation (NYSE:MCD), Archer-Daniels-Midland Company (NYSE:ADM) is one of the favorite dividend aristocrats of Jim Cramer.
Here is what Diamond Hill Long-Short Fund has to say about Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 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.”
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Disclosure: None. Jim Cramer's Favorite Dividend Aristocrats is originally published on Insider Monkey.
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