Jim Cramer Says These 2 Large Cap Dividend Stocks Are Hot February Buys

By Vandita Jadeja Published Feb 11, 1:35PM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Jim Cramer Says These 2 Large Cap Dividend Stocks Are Hot February Buys — © Thinkstock

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Media personality Jim Cramer often makes bold statements about companies and a lot of times, he proves himself correct. Investors keep an eye on his stock recommendations and often make their moves based on the stocks he picks. While one can never be 100% accurate in the stock market, Jim Cramer has managed to hit the bull’s eye several times. He has picked two large-cap dividend stocks as hot buys this month. If you are a passive income investor, stay with me. Cramer recommends buying Walmart Inc. (NYSE: WMT | MCD Price Prediction) and Merck & Co. Inc. (NYSE: MRK) for steady passive income. In this story, we discuss the catalysts working for the stocks.

Key points in this article:

Jim Cramer is a popular name in the world of investing.
He recommends investing in drug maker Merck and retailer Walmart for steady upside and passive income.
4 million Americans are set to retire this year. If you want to join them, click here now to see if you’re behind, or ahead. It only takes a minute. (Sponsor)

Walmart

A leading retailer, Walmart made timely moves and entered the e-commerce business to retain customers and has never looked back. Cramer calls the stock “Amazing”.

Despite tariff concerns, Walmart is up 8% in the past month and 79% over the year. Trading for $101, the stock is on a rally and is enjoying solid momentum. Jim Cramer thinks Walmart is the best value player in the retail industry. In November 2023, he stated, “I am loyal to value and Walmart is offering me value and that’s why Walmart stock could be up 66% for the year and still climbing.”

Interestingly, the stock gained more than 66% over the year, proving Cramer right. The company is set to make solid gains this year. The ad revenue is expected to grow and could hit a new record for the company. The company has also started to use drone delivery to reach more destinations and it is working on generative-AI powered chatbots to make the shopping experience personalized. Walmart is also growing its e-commerce market share and is giving strong competition to Amazon (NASDAQ:AMZN). There is massive opportunity in the e-commerce space and Walmart is here to make the most of it. If you are here for the passive income, the company has a dividend yield of 0.81% and it has increased dividends for the past 51 consecutive years.

In the third quarter, Walmart reported a revenue of $169.59 billion and an EPS of 58 cents. The comparable sales increased 5.3% while the U.S. e-commerce sales jumped 22%. Management hiked the outlook after stellar quarterly results as they expect consumers to spend more during the holiday season. What worked for the company was the perks it offered on purchases which attracted affluent customers who kept coming back. It also overhauled some of its stores to make them look like a sophisticated department store.

UBS analyst has a price target of $113 for the stock with a buy rating while BoFa analyst has a price target of $110 and a buy rating. Morgan Stanley has a price target of $106 with an overweight rating and Oppenheimer analyst also has a price target of $110 with an outperform rating. The analyst expects the company to report strong Q4 performance.

Merck

Cramer is a long-term investor in healthcare stocks and considers Merck to be an ideal pick. Earlier in Jan, he explained that Merck wasn’t getting enough credit for their portfolios and the new treatments. The present outlook for pharmaceutical companies might not be stellar but he highlighted the strong and lucrative potential they offer. He added, “Why am I so willing to focus on the so-called out years? Because the long-term possibilities for these companies, frankly, they’re incredible and by the way, incredibly lucrative too, even as the present is good, but not great.”

Trading at $87, the stock sank after the recently announced results. Overall, it is down 30% in the year and 11% year-to-date. Wall Street analysts have lowered the price target of the stock, making it a strong buy in the dip.

For the fourth quarter, Merck reported total sales of $15.6 billion, up 7% year-over-year, and a net income of $3.74 billion, up from a loss in the same quarter the previous year. For 2025, the management is forecasting sales of $65.6 billion, below expectations. The biggest growth driver for Merck is its cancer drug, Keytruda, and its patent is set to expire in 2028. This might lead to a drop in sales in the coming year unless Merck figures out a way to turn the sales around. Its HPV vaccine, Gardasil is a strong player in the China market but the recent tariffs can disrupt the same for the company. However, the vaccine was recently approved for men which can give a boost to the company’s revenue.

Merck has an impressive drug pipeline that will continue to generate cash flow for the business in the coming years. An increase in clinical trials in addition to the trials in progress can benefit the company. The company’s investor presentation showed 20 growth drivers that have the potential to turn into blockbuster drugs. Additionally, it also expects to expand the market share in infectious disease and animal health by mid-2030s.

The company enjoys a dividend yield of 3.71% and has increased dividends for 15 consecutive years.

About the Author Vandita Jadeja →

Vandita Jadeja is a financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis. She has contributed to several publications, including the Joy Wallet, Benzinga, The Motley Fool and InvestorPlace.