Jim Cramer Calls 2023 'Year Of The Yield': 3 Energy Stocks With Skyrocketing Yields

Zinger Key Points
  • Cramer agrees that next year could be the "hunt for the yield."
  • Cramer recommended owning an oil stock for 2023, one that returns capital to shareholders “religiously” instead of pumping more crude.

Jim Cramer recently discussed Morgan Stanley's "Year of the Yield" report, which addressed what to do in a world with less growth and lower inflation.

Cramer said on CNBC’s ‘Mad Money’ that central banks could potentially pause their rate hikes and even reverse some of them if the global economy goes into a downturn. With that being said there could be a major push for purchaser’s of two-year treasury yields, which have a yield of 4.4%.

Next year could be the "hunt for the yield," Cramer says, adding that it could come to fruition once central banks beat down inflation. His advice? Own an oil stock for 2023 — one that returns capital to shareholders “religiously” instead of pumping more crude with it.

Also Read: Jim Cramer Lists 6 'Cyclical Smokestack' Stocks Worth Owning: 'Customers Have No Choice But To Turn To Them'

Ever since Chevron CVX talked about buying a quarter of the company’s stock back, it has traded “red hot ever since,” Cramer said, touting that his picks have more growth, better dividends and are returning capital to shareholders.

Here are Cramer’s three energy picks:

  • Devon Energy Corporation DVN offers a dividend yield of 7.32% or $5.40 per share annually, making quarterly payments, with a decent track record of increasing its dividends for four consecutive years. The Oklahoma City-based company expanded its share-repurchase program by 25% to $2 billion, through May 4, 2023. At the end of April 2022, Devon repurchased 19.1 million shares at a total cost of $891 million. Cramer praised Rick Muncrief, the WPX chief who took over after merging with Devon, and pioneered the variable dividend model. As long as oil stays above $75 per barrel you will generate a large payout with this one, Cramer says.
  • Pioneer Natural Resources Company PXD offers a dividend yield of 9.81% or $25.44 per share annually, using quarterly payments, with a solid track record of increasing its dividends for four consecutive years. During the third quarter, Pioneer repurchased $500 million of its common stock at an average share price of $218. Pioneer Natural Resources follows the same variable dividend model as Devon, except the CEO J. Kenneth Thompson is on a mission to have the highest dividend yield in the S&P 500, said Cramer. If you annualize their payout this year they have a nearly 9% yield, said Cramer.
  • Coterra Energy Inc. CTRA is offering a dividend yield of 9.02% or $2.49 per share annually, through quarterly payments, with a notable track record of increasing its dividends for five consecutive years. Coterra bought back 28 million shares for a total cost of $740 million, leaving $510 million remaining on the $1.25 billion share repurchase program. Cramer said that Coterra Energy was created by a combination of Cabot Oil and Gas and Cimarex, with much of the firm's production being natural gas. Cramer said that if we want to help Europe to stop using Russian oil and gas, domestic natural gas production is essential.

Next: Cramer Says This Stock Has Too Much Political Risk


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