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Jim Cramer’s 11 Best Dividend Stocks

In this article, we will take a detailed look at Jim Cramer's 11 Best Dividend Stocks. For a quick overview of such stocks, read our article Jim Cramer's 5 Best Dividend Stocks.

Uncertainty around the future of stock markets remains high, with analysts and investors divided on what plan of action the Federal Reserve would devise to tackle inflation that continues to be sticky. However, some circles are hopeful that the next strong bull market is expected to begin immediately after the Fed starts to cut interest rates. One of the biggest sources of this optimism is the huge cash investments parked in money-market funds. A latest report by the Wall Street Journal said as of the end of the third quarter of 2023, about $8.8 trillion was invested in CDs and money-market funds. The report quoted Randy Gwirtzman, a portfolio manager at Baron Capital, who reportedly said these assets invested in money-market funds are "staggering."

“All that dry powder is on the sidelines and waiting to invest.”

If the floodgates of money-market funds open and all this cash gets funneled into the stock market, chances of dividend stocks with strong growth history and fundamentals getting a boost are high. Why? If a company has been continuously increasing its dividends for say two decades, it's an indicator of its financial health and strong fundamentals. Amid volatility and inflation, investors are hungry for high quality stocks that can sustain market shocks in 2024 and beyond.

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UBS in its 2024 outlook report said that it is highly bullish on quality stocks as it believes companies with strong ROIC, "resilient operations" and low debt will continue to generate profits even during a weaker growth environment. The UBS report added:

"Also, quality stocks have historically out- performed in the late stages of the business cycle, including in periods of economic contraction, which should offer portfolio protection if the economy slows more than we expect. The quality tilt also aligns with our preference for US technology companies, which should be among the key beneficiaries of AI-related demand for both hardware and software. Quality stocks typically have higher valuations than the overall index, but we think that quality is worth paying for in 2024. Investors can find quality stocks within US tech; stable quality-income and high-quality cyclical stocks in Europe; and in select names in Asia."

Jim Cramer's Best Dividend Stocks
Jim Cramer's Best Dividend Stocks

Methodology

For this article we watched several programs of Jim Cramer and listed down all dividend stocks he's bullish on or recommends buying. From these stocks we selected those with the highest number of dividend investors. Some top names in the list include Procter & Gamble Co (NYSE:PG), Walmart Inc (NYSE:WMT) and Merck & Co., Inc. (NYSE:MRK).

11. Realty Income Corporation (NYSE:O)

Number of Hedge Fund Investors: 23

Jim Cramer was recently asked about his thoughts on Realty Income Corporation (NYSE:O) in context of the stock's declines and whether or not one should stick to Realty Income Corporation (NYSE:O). Cramer said the stock should be held and praised Realty Income Corporation's (NYSE:O) 5%+ monthly dividend yield. Cramer said Realty Income Corporation (NYSE:O) is a "steady story" and said he likes monthly dividends and steady stories.

As of the end of the third quarter of 2023, 23 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Realty Income Corporation (NYSE:O).

10. Clorox Company (NYSE:CLX)

Number of Hedge Fund Investors: 34

With over four decades of consistent dividend increases, consumer products giant Clorox Company (NYSE:CLX) is a notable dividend aristocrat which hedge funds and retail investors like. Jim Cramer is also a fan of this dividend stock which has a yield of 3.35%.

In November, Jim Cramer said in response to a question about Clorox Company (NYSE:CLX) that the hack is "behind them" and he would "own the stock." Cramer was referring to a huge cyber attack on Clorox Company (NYSE:CLX) which Clorox Company (NYSE:CLX) disclosed in August 2023. The attack significantly impacted Clorox Company (NYSE:CLX) operations and caused millions in losses.

In addition to CLX, Jim Cramer also likes Procter & Gamble Co (NYSE:PG), Walmart Inc (NYSE:WMT) and Merck & Co., Inc. (NYSE:MRK).

9. Energy Transfer LP Unit (NYSE:ET)

Number of Hedge Fund Investors: 34

In August 2023 while talking about energy infrastructure stocks and MLPs Jim Cramer talked about Energy Transfer LP Unit (NYSE:ET) and said if you are looking for tax-free income these are the kind of stocks you should be looking.

Energy Transfer LP Unit (NYSE:ET) has a dividend yield of about 8.9%.

In November, Cramer said Energy Transfer LP Unit's (NYSE:ET) yield is "terrific" and said Energy Transfer LP Unit (NYSE:ET) is "stable."

8. Enbridge Inc (NYSE:ENB)

Number of Hedge Fund Investors: 35

Canadian energy company Enbridge Inc (NYSE:ENB), which has a dividend yield of over 7%, ranks 8th in our list of the best dividend stocks to buy according to Jim Cramer. Cramer recently said in his program that he "likes" Enbridge Inc's (NYSE:ENB) acquisition of utilities from Dominion Energy. Cramer said the Street does not like this deal but the Street is wrong. Cramer also said Enbridge Inc (NYSE:ENB) CEO Gregory L. Ebel "is doing a good job."

As of the end of the third quarter of 2023, 35 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Enbridge Inc (NYSE:ENB), up from 28 hedge funds in the previous quarter.

ClearBridge Dividend Strategy made the following comment about Enbridge Inc. (NYSE:ENB) in its Q3 2023 investor letter:

“The financials sector was our best contributor and the industrials sector our biggest detractor, each dominated by one stock. Our energy overweight was also a help, though this was offset by negative effects from our underexposure within energy to commodity-sensitive exploration and production companies, and by our holding Enbridge Inc. (NYSE:ENB), which sold off after announcing a large acquisition in the quarter.”

7. Constellation Brands, Inc. (NYSE:STZ)

Number of Hedge Fund Investors: 50

Constellation Brands, Inc. (NYSE:STZ) has a dividend yield of about 1.3% as of January 16. Jim Cramer recently advised investors to ‘stay close’ to Constellation Brands, Inc. (NYSE:STZ) as it works to create value for shareholders.

During Q3 earnings call the company's management talked about its dividend policy:

We expect to maintain a dividend payout ratio of approximately 30%, supporting continued growth of our dividend per share in line with our earnings expectations. We plan to invest approximately $5 billion in growth and maintenance CapEx from fiscal ’24 to fiscal ’28, primarily focused on brewing capacity expansions for our beer business.

Read the full earnings call transcript here.

6. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Investors: 65

Jim Cramer recently praised how successful Costco Wholesale Corporation's (NASDAQ:COST) first store opening in China was and said it's "fun" for people to go to Costco Wholesale Corporation (NASDAQ:COST) stores. Cramer also praised Costco Wholesale Corporation's (NASDAQ:COST) business model where consumers get discounts after buying memberships. With about two decades of consistent dividend increases Costco Wholesale Corporation (NASDAQ:COST) is a reliable dividend play. In December Costco Wholesale Corporation (NASDAQ:COST) announced a special dividend of $15 per share.

Like Procter & Gamble Co (NYSE:PG), Walmart Inc (NYSE:WMT) and Merck & Co., Inc. (NYSE:MRK), Costco is a famous dividend stock Jim Cramer and hedge funds like.

Tsai Capital Corporation stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its fourth quarter 2023 investor letter:

Costco Wholesale Corporation (NASDAQ:COST) ($660.08 – up 49.0% for the year. Recent high $681.91): Costco operates more than 860 warehouses worldwide and provides its members with a deep value proposition, promising not to charge more than a 15% markup on goods versus its own cost. This in turn has resulted in an extremely loyal membership base of more than 70 million, over $1,900 in net sales per square foot, and high-margin, recurring membership fees. Since 2012, W. Craig Jelinek has been at the helm of Costco and has perpetuated the values and culture of the company’s founder, Jim Sinegal. And while Mr. Jelinek recently stepped down as Chief Executive Officer, we see little change under his successor, Ron Vachris, who has worked at the firm for more than 40 years, having started out as a forklift driver. In many ways, Costco is a cult (I mean that in a positive way), and its allure is only just beginning to spread to international markets, including China. With a stellar management team, strong returns on capital and ample opportunities for growth, domestically and internationally, we believe Costco will continue to compound earnings at a low double-digit rate.”

 

Click to continue reading and see the Jim Cramer's 5 Best Dividend Stocks.

 

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Disclosure. None. Jim Cramer's 11 Best Dividend Stocks was initially published on Insider Monkey.