In this article, we discuss Jim Cramer’s 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 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 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, 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 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 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, Caterpillar Inc., and McDonald’s Corporation, Federal Realty Investment Trust 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 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 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 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 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 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’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 still remains one of Cramer’s favorite dividend aristocrats.
Hormel Foods Corporation 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 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 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 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 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 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 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 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 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 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, 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, Caterpillar Inc., and McDonald’s Corporation, Archer-Daniels-Midland Company 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 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.”
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 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 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 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 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. 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. 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. 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. has paid increasing annual dividends to shareholders for 29 consecutive years.
According to Insider Monkey’s data, 43 hedge funds were long Caterpillar Inc. 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. was one of them. Here is what the fund said:
“We also initiated a position in Caterpillar, 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 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 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 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, 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 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 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 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 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 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 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). 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.”
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This article is originally published at Insider Monkey.
