Jim Cramer of CNBC gave investors a list of his top ten “dividend aristocrats” to hold onto through the end of the year on Tuesday, claiming that their dividend payments provide security against Federal Reserve-related market losses.
The S&P 500’s dividend aristocrats—companies that have continuously increased their dividends over the previous 25 years—have fared better than the larger U.S. stock index during the Fed’s tightening campaign this year, the “Mad Money” host pointed out.
And now, in light of fresh worries about a hawkish Fed, Cramer said he thinks it’s time to focus on his favorites in the group for the remainder of the year, just as he did at the beginning of 2022.
Archer-Daniels-Midland: According to Cramer, the agriculture company is a good play on supply chain disruptions. He also mentioned that a rise in crop prices had assisted the stock’s recovery from its mid-July low. “Conservative, decent stock,” he remarked.
General Dynamics: General Dynamics is the lone dividend aristocrat in the defense industry, despite Cramer’s assertion that he is optimistic about the sector as a whole. “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,” he said.
Coca-Cola: The beverage industry giant, according to Cramer, is a “textbook defensive stock,” and its about 2.8% dividend yield offers further security. Coca-Cola stock has essentially been unchanged over the previous six months, but Cramer believes that Fed Chair Jerome Powell’s warning that the central bank means business will help the company.
Hormel: Another well-known defense brand is the parent business of Skippy peanut butter and Spam, according to Cramer. Additionally, he claimed that Hormel may be “a good trade-down play” as inflation squeezes consumers.
McDonald’s: Cost inflation and the strong U.S. dollar, two recent concerns that have been weighing on the fast-food giant’s stock, are, in Cramer’s opinion, passed their peak. “I think McDonald’s can resume its long march higher real soon,” he described it as being ideal “bounce-back candidate.”
Chubb: The insurance company, according to Cramer, benefits from rising interest rates, which is notable in light of the Fed’s recent reinforcement of its hawkish stance. “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 said.
Federal Realty: The real estate investment trust has a yield of about 4.2% and a sizable portfolio of suburban mixed-use properties. According to Cramer, one of the main reasons the REIT made this list is that he believes such kinds of assets will be robust amid a slowdown in the economy.
Realty Income Corporation: “The stock’s been punished lately because most retail has been struggling,” Cramer noted that this company has “tons of consistent clients” such as pharmacies, grocery stores, dollar stores, and convenience stores. “Best of all, Realty Income pays you a monthly dividend” this yields 4.3%, according to Cramer.
Linde: Cramer mentioned that the industrial gas company’s shares are held through his charitable trust. Despite the difficult time for cyclical businesses, he said Linde has a “great long-term story” and is well worth buying when the stock is down.
Caterpillar: The industrial giant’s stock has recovered from its July lows, but it is still trading well below its April highs. “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,” Cramer said.