This article presents an overview of Jim Cramer’s 5 Best Dividend Stocks. For a detailed overview of such stocks, read our article, Jim Cramer’s 11 Best Dividend Stocks.
5. Procter & Gamble Co (NYSE:PG)
Number of Hedge Fund Investors: 75
Jim Cramer has long been a fan of Procter & Gamble Co (NYSE:PG). His charitable trust owns a stake in Procter & Gamble Co (NYSE:PG). Jim Cramer thinks Procter & Gamble Co (NYSE:PG) is a best of breed stock with a strong balance sheet and steady dividends. In December, Jim Cramer said Procter & Gamble Co (NYSE:PG) might have some issues in the short-term but the stock is a good buy for the long term. Cramer said Procter & Gamble Co (NYSE:PG) has a “good yield” and it’s a dividend aristocrat. Cramer said he likes Procter & Gamble Co (NYSE:PG) because “it is for sale and it is the biggest beneficiary of the big-cap stocks.”
Hayden Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, Coca-Cola trades at ~30x P/E despite having the same earnings as 10 years ago. The Procter & Gamble Company (NYSE:PG) is likewise at ~27x P/E, with earnings only ~12% higher than a decade ago (or a ~1% annual growth rate). This equates to a mere 3.3% – 3.7% earnings yield.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Proctor & Gamble is facing disruption from direct-to-consumer brands that offer their products for a fraction of the price.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
4. General Electric Co (NYSE:GE)
Number of Hedge Fund Investors: 76
Albeit with a low dividend yield, General Electric Co (NYSE:GE) is nonetheless a strong and reliable company will a strong future according to analysts. Earlier this month, Jim Cramer said in his program that General Electric Co (NYSE:GE) is an “inexpensive” stock and that “these guys are the real deal.” Cramer repeatedly praised General Electric Co’s (NYSE:GE) aerospace operations and said they are better than Boeing’s
In December General Electric Co (NYSE:GE) declared a dividend of $0.08 per share. Forward dividend yield at the time came in at 0.26%.
As of the end of the third quarter of 2023, 76 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in General Electric Co (NYSE:GE).
Longleaf Partners Fund made the following comment about General Electric Company (NYSE:GE) in its Q3 2023 investor letter:
“After a busy first half of the year, we initiated one new position in the quarter in a business we have successfully owned previously and were able to buy again at a discount within a new corporate structure. We opportunistically trimmed and added to several positions throughout the quarter, and we exited General Electric Company (NYSE:GE) and our small position in Hasbro after the share price ran away from us. GE was a multi-year portfolio holding for us that started out rocky but ultimately was a good illustration of owning a “quality” business that was temporarily viewed as “value” (aka, perceived as low quality) before ultimately being weighed properly by the market. CEO Larry Culp was a great partner, creating significant value for shareholders and closing the price-to-value gap. Under his leadership, GE materially improved its operations and is well under way on plans to simplify the business by separating it into three world-class companies. The market has finally caught up with reality versus perception and is pricing GE accordingly. Unfortunately, this means we no longer see a margin of safety for the business but will continue to watch GE and Culp closely and hope to have the opportunity to partner with him again.”
3. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 80
In December, Jim Cramer said that now is the right time to start buying Walmart Inc (NYSE:WMT) stock. Cramer said the stock goes down every day because it used to go up every day. Walmart Inc (NYSE:WMT) has a strong dividend history and a solid business that makes it a favorite among hedge funds.
As of the end of the third quarter of 2023, 80 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Walmart Inc (NYSE:WMT) as of the end of the third quarter.
2. Merck & Co Inc (NYSE:MRK)
Number of Hedge Fund Investors: 85
Jim Cramer is highly bullish on Merck. In the summer of 2023 Cramer said Merck was doing a “terrific” job at reinventing itself. In October, Cramer said:
“Yes it is…I think Merck is doing very, very well.”
With over a decade of consistent dividend increases and solid fundamentals, Merck is a highly popular stock among hedge funds.
Carillon Eagle Mid Cap Growth Fund made the following comment about Merck & Co., Inc. (NYSE:MRK) in its Q3 2023 investor letter:
“Merck & Co., Inc. (NYSE:MRK) underperformed in the third quarter, based on what we view as largely macroeconomic-related factors. The company continues to execute well, both clinically and fundamentally, but much of the biopharmaceutical industry has been weak as investors are gravitating to other, more cyclical sectors.”
1. JPMorgan Chase & Co (NYSE:JPM)
Number of Hedge Fund Investors: 109
JPMorgan tops our list of the top dividend stocks Jim Cramer likes. A few days ago Jim Cramer said during his program that JPMorgan shares can keep “grinding higher.”
In its fourth quarter 2023 investor letter, Vltava Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM):
“Last spring, the US went through a brief banking crisis that cost several smaller and medium-sized banks their lives. One of them, First Republic Bank, with assets of $230 billion, went into receivership and was bought out by the largest US bank, JPMorgan Chase & Co. (NYSE:JPM). The acquisition terms were very favourable for JPM and the facts that few, if any, other banks could have taken over the whole of First Republic Bank in its then-present state while guaranteeing more than $100 billion of its deposits played a role. JPM could do it. It is not only the largest, but also by its balance sheet the strongest US bank and, in our opinion, clearly the best managed. It has come out of this crisis even stronger. We have actively followed the banking sector for 20 years in many countries around the world. Our view is that a well-managed bank can be a very good long-term investment but that it is better to focus on the best and highest quality available. Banking is not a sector where it pays to trade quality for cheaper valuations. That is why we hold JPM.”
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