Jim Cramer’s Top 2 Dividend Stocks for Retirees

Realty Income stands out as what Cramer calls the go-to monthly dividend stock for retirees seeking consistent income. The real estate investment trust, known as ‘The Monthly Dividend Company,’ has declared 663 consecutive monthly dividends, demonstrating remarkable consistency in its payout history. With a current yield of 5.38%, Realty Income provides retirees with regular monthly income that aligns well with living expenses and bill payments.

The company’s portfolio stability is particularly impressive, maintaining a 97% occupancy rate even during the 2008 financial crisis and continuing at high levels today. This consistency stems from Realty Income’s strong retail tenants and carefully managed property portfolio. Cramer specifically recommended the stock to a 67-year-old caller seeking high-yield dividend stocks, immediately suggesting Realty Income as the solution for yield-seeking retirees.

Cramer believes Realty Income is particularly suited for ‘people who are a little bit older’ due to its reliable monthly payments and sustainable yield. The convenience of monthly dividends combined with the company’s track record of maintaining occupancy through economic downturns makes it an attractive option for retirees prioritizing income stability over aggressive growth.

Johnson & Johnson represents a compelling turnaround story in Cramer’s analysis, with the stock up 29% year-to-date despite broader healthcare sector weakness. As a Dividend King with 63 consecutive years of dividend increases, JNJ offers retirees both income stability and recent capital appreciation potential. Cramer believes the stock could reach $200 by year-end, representing significant upside from current levels.

The company’s diversified business model has been key to its recent success. While many perceive JNJ as primarily a pharmaceutical company, Cramer emphasized that ‘it’s not just a drug company’ but also has a ‘terrific medical device business that accounts for 36% of their sales.’ This diversification has helped JNJ defy the ‘gravitational pull of this healthcare bear market’ that has left other major pharma companies in the red.

JNJ’s oncology business has been particularly strong, with sales surging 21% in the first six months of the year. Cramer described the division as ‘simply on fire’ and noted that the company has done a ‘fantastic job to move past this big patent expiration.’ The pharmaceutical business has both grown and outperformed sales expectations, contributing to the stock’s momentum.

Cramer has been closely monitoring JNJ’s talc lawsuits but believes the litigation risk has peaked. ‘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,’ Cramer stated. He noted that JNJ has been ‘winning all the cases’ and that it’s practical for the company to ‘keep fighting them one by one.’

The financial commentator predicts that plaintiffs will eventually realize ‘it’s just too costly to keep on taking J&J’ to court, reducing long-term litigation concerns. This assessment, combined with JNJ’s ‘very rare AAA balance sheet’ and ‘reasonable valuation,’ makes the stock attractive despite the legal challenges that have concerned some investors.

For retirees considering these dividend stocks, both companies offer different but complementary benefits. Realty Income provides high, reliable monthly income with proven stability through economic cycles, while Johnson & Johnson offers growth potential alongside its Dividend King status and nearly 3% yield. Cramer’s endorsement of both stocks reflects his view that they represent quality choices for retirees seeking income and stability in their investment portfolios.