Jim Cramer's 5 Favorite Dividend Stocks

Despite softer inflation data, the Federal Reserve has indicated it is ready to wait longer before initiating rate cuts. With inflation still elevated and the political environment heating up, income investors looking for stability are turning to reliable dividend stocks. A report from Achor Capital cites data from Davis Research and Hartford Funds, which shows that companies that pay dividends post higher returns on average than non-dividend-paying companies. From March 1972 through December 2010, dividend stocks returned 12.9% annually on average, while companies that didn't pay dividends returned 8.6%.

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Jim Cramer has been discussing high-quality dividend stocks in his programs on CNBC over the past several months. Let's look at some of the top dividend stocks he recommends:

Enbridge Inc

Jim Cramer has consistently recommended energy pipeline company Enbridge Inc. ENB over the past several months. In May, during the ‘Lightning Round' segment of his program on CNBC, Cramer said he likes Enbridge and trusts its management.

"I am one of the few people who like Enbridge down because I trust that management team," Cramer said.

With an over 7% dividend yield, Enbridge is a high-yield dividend growth stock, as the company has increased its payout for 29 straight years. Last year, the company generated $10.72 billion in cash from its operations, an over 380% increase since 2014. Earlier this year, the company expected to grow its EBITDA by 7% – 9% through 2026, while distributable cash flow (DCF) is expected to grow at a 3% rate.

Wells Fargo

With a 2.3% dividend yield, Wells Fargo & Co WFC is a notable bank dividend stock. When asked about Morgan Stanley during a recent program on CNBC, Cramer said MS has run "too much" and instead pitched Wells Fargo as a better buy.

"The only one in that group I'd still buy is Wells Fargo of Charlie Scharf (Wells Fargo CEO). That would be the stock to buy."

Wells Fargo reported second-quarter results earlier this month. EPS in the period came in at $1.33, surpassing estimates by $0.05, while revenue inched up 0.8% year over year to $20.69 billion, beating the consensus by $460 million. Following the earnings report, BMO Capital increased its price target to $59 from $57 and kept a Market Perform rating. However, BMO said Wells Fargo's full-year guidance for net interest income was "disappointing." 

Dow Inc

When recently asked about integrated energy and chemicals company Sasol Ltd., Jim Cramer instead pitched Dow Inc. DOW as a better buy. 

"No, if you're going to do that, you want to buy Dow, no longer Dow Chemicals, Dow Inc," said Cramer.

One of the biggest chemical companies in the world, Dow Inc., had a dividend yield of about 5% as of July 18. Earlier this month, Wolfe Research published a list of stocks that could benefit if Republicans came to power after the U.S. elections in 2024. Dow Inc. was included in this list. 

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Diamondback Energy

Texas-based energy company Diamondback Energy Inc. FANG is one of the top dividend stocks Jim Cramer is bullish on. When asked in a recent program about Devon Energy, Cramer recommended the caller buy Diamondback Energy. The stock has a dividend yield of over 4.3% as of July 18.

Diamondback Energy shares have gained about 34% so far this year.

Chevron

Oil giant Chevron Corp CVX is one of Jim Cramer's favorite dividend stocks. Last month, Cramer was asked about his thoughts on Chevron during the "Lightning Round" segment of his show on CNBC. Here is what he said:

"I like Chevron. It's got a four percent yield. I don't think the upside is as much as Conoco (ConocoPhillips), but I like that dividend."

Chevron is one of the most sought-after dividend stocks, with a high yield and 36 straight years of dividend increases. The company is also famous for its stock buybacks. Last year, it authorized a $75 billion stock repurchase plan. 

With roughly $6.28 billion in cash and an additional $47.65 billion in long-term investments, Chevron is a reliable dividend company with growth prospects. The company expects oil and gas production to grow at a CAGR of over 3% through 2026.

Looking For Higher-Yield Opportunities?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. 

For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000.

Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. 

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