Stocks are in for a tough time in 2022. But not all stocks are the same — some are more resilient than others.
CNBC’s Jim Cramer argues that Dividend Aristocrats — S&P 500 companies that have raised their dividend for at least 25 consecutive years — could offer investors protection during tough times for the market.
“Remember, the whole point of owning Dividend Aristocrats is that they can try to protect you from the ugliness of the bear market on the way down,” he says. “This is important given the fact that [Jerome Powell] he is bound to bring pain.’
Cramer explains that from Jan. 3 to the market bottom on June 16, his favorite 35 Dividend Aristocrats fell about 10%. While he acknowledges the performance isn’t “good,” he also points out that the S&P 500 is down 23% while the Nasdaq is down 32% over the same period.
Cramer compiled a list of 10 Dividend Aristocrats to own for the rest of this year. Here’s a look at three of them.
Coca-Cola is a classic example of a recession-proof business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.
Cramer calls Coca-Cola a “textbook defensive stock.”
The company’s established market position, sheer scale and portfolio of iconic brands – including names like Sprite, Fresca, Dasani and Smartwater – give it plenty of pricing power.
Add in solid geographic diversification – its products are sold in more than 200 countries and territories around the world – and it’s clear that Coca-Cola can thrive this long. After all, the company went public more than 100 years ago.
Most impressively, Coca-Cola has increased its dividend for 60 consecutive years. The stock currently yields 2.8%.
Archer-Daniels-Midland isn’t exactly a household name. Cramer explains the business succinctly: “They sell seeds and also process all kinds of crops.”
In fact, he considers ADM “one of the top farming games out there.”
Agriculture is by nature a highly resilient industry. Whether boom or bust, people still need to eat. This resilience is reflected in ADM’s share price performance. While the broad market is deep in the red year to date, ADM shares are up more than 30%.
Cramer also argues that the company is firmly positioned to capitalize on supply chain disruptions.
“Remember, Ukraine accounts for 13% of the world’s calories and its business has halved,” he says. “Additionally, ADM trades at less than 13 times earnings with a yield of nearly 2%. Conservative, decent stock.”
Income from real estate (O)
Realty Income is a real estate investment trust with a portfolio of over 11,000 properties under long-term leases with its commercial tenants.
Cramer notes that income real estate hasn’t been a hot stock lately “because most retail is struggling.”
However, he also points out that the company has “tons of loyal customers.”
Realty Income’s top tenants include big names like Walmart, CVS Pharmacy and Walgreens — companies that have survived multiple economic cycles.
In fact, AEEAP claims to collect approximately 43% of its total rent from investment grade tenants. A diversified, high-quality tenant base allows Realty Income to pay reliable dividends.
Cramer also likes the stock’s monthly distribution policy. While most Dividend Aristocrats pay quarterly dividends, Realty Income shareholders are paid monthly.
The stock currently yields 4.5%.
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This article provides information only and should not be construed as advice. Provided without warranty of any kind.