2 Dividend Stocks That Jim Cramer Wants Every Retiree to Own

Key Points

• Jim Cramer likes the following two dividend stocks.
• One is a Dividend Aristocrat and another is a Dividend King.
• Their dividends are well-covered, and both have a history of being consistent.
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Retirees and older individuals are among the biggest demographics who tune into Jim Cramer’s Mad Money show. You may disagree with Cramer’s investing methodology and critique his failures, but it’s undeniable that his opinions have sway.

And when it comes to long-term dividend investing, those opinions have held up quite well. Cramer’s opinionated takes often go awry since he’s mostly asked about the trendiest growth stocks that are hard to assess. But when dealing with dividend stocks with a consistent track record, it’s no longer hit or miss. Jim Cramer has decades of experience with the stock market, and his input is worth lending an ear to when it comes to dividend stocks.

Here are two dividend stocks he likes for retirees:

Realty Income (O)

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Realty Income (NYSE:O)is a real estate investment trust (REIT) that mostly has retail tenants. Its tenants are strong, and the company has managed to maintain a very stable and consistent portfolio over the years with little to no trouble. The occupancy rate has remained at 97% even in 2008 and continues to be high.

The consistency is such that Realty Income is called “The Monthly Dividend Company”. It pays dividends to its shareholders every month. The yield right now is 5.38% and has declared 663 consecutive monthly dividends.

Cramer thinks highly of O stock, but hebelieves “Realty Income is for people who are a little bit older.”

Earlier this year, a 67-year-old called Cramer and asked about two high-yield dividend stocks. But before he could even finish the question, Cramer replied. He said, “No, no, no. If you need yield, just go by our Realty Income.”

Realty Income raises the bar to the point where it has become the go-to monthly dividend stock. For retirees, I believe it’s the best one. Monthly dividends are convenient, and the yield is very high, but not unsustainable.

Johnson & Johnson (JNJ)

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Johnson & Johnson (NYSE:JNJ)started developing a reputation for being a steady Eddie that you hold for almost no gains and a small dividend yield. Given that a 4%-plus yield is easily available risk-free these days, JNJ stock hasn’t been the most attractive despite it being a Dividend King with 63 consecutive years of dividend increases on record.

However, the story is changing quickly. The stock is now up 29% year-to-date, and this is a rally that many believe could continue as JNJ makes up lost ground. Conceivably, it could end up well above $200 by year-end, and Cramer has some nice things to say about the business.

He interviewed the company’s CEO last Friday, and this week, he said, “I’ve been worried about the talc lawsuits they have, but I believe the risk from the asbestos in the baby powder litigation has crested [peaked].” He elaborated, “…J&J has been winning all the cases, and it’s plain to keep fighting them one by one. Eventually, I bet the plaintiffs will realize it’s just too costly to keep on taking J&J.”

Last month, he did a much deeper dive on Johnson & Johnson. On Mad Money’s September 11 show, Cramer said, “Nearly every other big pharma name is solidly in the red for the year. So how the heck did Johnson & Johnson defy the gravitational pull of this healthcare bear market? First off… It’s not just a drug company. It’s also got a terrific medical device business that accounts for 36% of their sales.”

He elaborated, “J&J also has great franchises and really exciting technologies in other areas… has done a fantastic job to move past this big patent expiration… pharma business has both grown and outperformed sales expectations… More importantly, J&J has a fabulous oncology business. It’s simply on fire, with sales up 21% in the first six months of the year.”

He ended his analysis of the company by saying “… a nice yield that’s just under 3%, very rare AAA balance sheet, bottom line here with so much momentum, but still a reasonable valuation… I say it could go through to $200.”

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