“Buy, Buy, Buy!” Retirees: Jim Cramer Has 1 Favorite Dividend Stock

Jim Cramer is mostly known for discussing high-growth tech stocks on CNBC’s “Mad Money” show. The number of callers querying him on such stocks has only increased with the AI rally.

That doesn’t mean Cramer doesn’t have his eyes on good dividend picks. His views are that dividend stocks are good income sources for investors, though he believes you shouldn’t chase yields above 8%. Once the yield starts flirting with double digits, the odds of a dividend cut rise faster than the yield itself.

However, some of Cramer’s favorite dividend stocks yield quite close to that level. He has repeatedly recommended many dividend stocks with yields above 7%. We will be looking into one such dividend stock that Cramer has given bullish input on recently.

Jim Cramer wants you to buy Energy Transfer (ET)

In a Lightning Round segment on July 24, Cramer said that Energy Transfer (NYSE:ET) “got its act together a long time ago. It’s a really, really good stock [buy, buy, buy!].”

Earlier, he said, “Natural gas is very hard to tell. I think that 3 to 4 is probably where it belongs. ET had a problem. They’ve got some ethane issues. The government is currently restricting ethane imports from China because we’re trying to say, listen, you won’t give us rare earth materials, we won’t give you ethane.”

He added, “Yes. ET is smart… just so you know, this is a pipeline company… you buy it by the percentage yield. So it’s got a 7% yield now, you buy some, 8, you buy some, 9, you buy some. That’s how you buy these stocks, and I’m gonna continue to pound that that’s the way to do it.”

In January, he again said, “Keep owning Energy Transfer (ET) 7% dividend yield stock.”

Why Cramer likes stocks like ET

Cramer seems not only bullish on Energy Transfer, but other pipeline companies as well, as he’s even willing to contradict his stance on high yields by saying “...9, you buy some.”

The best explanation is that the current environment is extraordinarily good for betting on these stocks. Not only are these pipeline companies mostly outside the purview of tariffs, but they will also gain from the rate cuts on the horizon.

Tariffs and volatility in energy prices do not hurt companies like Energy Transfer, as they operate on fee-based long-term contracts and simply take care of the energy flowing through their pipelines. Any tariff-related increase in equipment cost is minuscule in the grand scheme of things.

Energy Transfer’s fundamentals are solid.

ET is not a boring pipeline stock that stays flat and pays you a dividend to make it less boring. The underlying stock has gained 168.77% in the past five years, outperforming both the S&P 500 and the Nasdaq Composite, even without including dividend reinvestments.

Cash flow has remained consistent, and the company has seen adjusted EBITDA surge from $12.95 billion in 2021 to $15.4 billion in 2024. There are no signs that this momentum has come to an end just yet. In fact, analysts see 14.16% EPS growth annually in the coming years, along with 5.8% annual sales growth. These are much better metrics than most other stocks in this sector.

U.S. energy production is booming in the Permian Basin, giving the company plenty of contracts. On top of that, ET is well-positioned to benefit from rising U.S. energy demand from data centers. Analysts project ET’s EBITDA to grow at 7-10% annually through 2030.

Plus, U.S. energy exports are also booming. It is more worthwhile for many European and Asian countries to simply buy from the U.S. after 2022, especially after things in the Middle East became much more volatile. Many shipping companies charge more due to the risks, while others have to sail around Africa. U.S. LNG exports reached record levels in December last year. Those records could be broken this winter as Trump has the buyers of Russian and Iranian oil and gas in his crosshairs. All of this will only benefit ET stock.

Time to buy ET stock?

Cramer has been right on ET stock, and he has a good grasp of the megatrends that are lifting these pipeline stocks. Energy Transfer is now a solid long-term holding with plenty of gains ahead in the coming years.

The forward dividend yield is 7.29%, and is well-covered by the forward payout ratio of 83.9%. Nearly 90% of its earnings are from fee-based long-term contracts, so even a recession is unlikely to knock down the dividend payouts. As mentioned before, it’s also unsusceptible to tariffs.

I also see the stock itself performing well in the coming years, and reinvesting those yields should lead to market-beating total returns. A buy indeed.

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