Wall Street is in a slump again, as investors try to navigate a path between high inflation and aggressive interest rate hikes by the Federal Reserve. The former is raging – whether you blame Russia or Biden, the fact that inflation is high can no longer be avoided – while the latter is rising – but whether it is rising fast enough to curb inflation is yet to be determined.

Jim Kramer, well-known host of CNBC’s “Mad Money,” is taking a hint from the bond market, where two-year US Treasuries are up 4.3% recently. In Kramer’s view, this sharp rise in medium-term Treasuries signals more aggressive action by the Federal Reserve on interest rates – and that brings with it increased risks of a general economic recession.

This, in turn, leads Cramer to a specific investment option – high dividend stocks. “You want to hedge against the high-return shell because its dividends will give you a cushion,” Cramer noted.

To find these “accidental high returns,” Cramer scanned the S&P 500, looking for stocks that were below 30% or more of their peak values ​​and making 4% or better on dividends.

Cramer gives many of these stocks his personal approval. We’ve collected details of two of his picks from TipRanks . databaseand we’ll look at them together with comment from Street analysts.

Devon Energy Company (DVN)

Cramer’s first pick that we’ll examine is Devon Energy, an independent Oklahoma City-based hydrocarbon exploration and production company focused on onshore assets in the United States. Devon mainly operates in the Delaware Basin, one of the major oil and gas formations on the border between West Texas and New Mexico. But while Texas operations form the core of the company’s business, Devon is also active in Colorado, Montana and Oklahoma.

Devon is in the midst of an expansion move, and in early August the company announced a definitive takeover agreement for Validus Energy, the operator of the Texan Eagle Ford formation. The acquisition is a cash deal worth $1.8 billion, and will be effective June 1, 2022, when it closes in the third quarter.

The story continues

Meanwhile, Devon announced its financial results for the second quarter of 2022, and investors can take heart. The company had the highest revenue in more than two years, at $6.27 billion, but that was only the upper end. Prospecting, Devon reports net income of $1.9 billion, or $2.59 per diluted share. That was up from just 60 cents on diluted earnings per share in the last year’s quarter, and is an indication of the company’s rapid rise in revenue and earnings over the past six quarters. Even better, for investors, free cash flow was $2.1 billion reported in the second quarter of 22, a record for Devon.

This free cash flow is important because it ensures that the dividend is financed. The payment, on a fixed-plus-variable model, was announced for a September 30 payment at $1.55 per common share. That was up 22% from the previous quarter, the highest single dividend ever paid by Devon. On an annual basis, the div is worth $6.20 and yields 10.4%.

Giving a bullish view on Devon, a five-star Troist analyst Neil Dingman He notes the Validus acquisition as a net positive, but sees the company as solid even without it.

Devon continues to demonstrate highly successful operating results that, when combined with robust pricing and cost containment, result in record returns for shareholders. The company has once again paid an all-time high dividend while simultaneously buying back shares and paying off debts.”

“We are still getting questions from investors whether DVN will continue its strict capital discipline, and the short answer is growth per share rather than absolute production growth will remain the mantra. So while core earnings can increase further and buybacks can expand In our view, all factors should continue to add up to one of the best cash-return models in the group,” added the analyst.

Judging from these comments, Dingmann evaluates DVN a Buy, with a $115 price target implying a 92% potential one-year rally. Based on the current dividend yield and the expected price estimate, the stock has approximately 102% of the total potential return. (To watch Dingman’s record, click here)

In general, there are 10 recent reviews on DVN, and they are divided equally – 5 purchases and 5 reservations. This gives the stock a moderate buy analyst consensus rating. Meanwhile, DVN shares are trading at $60.05, with an average price target of $83.79 indicating a rise of nearly 40% from that level. (See DVN stock forecast on TipRanks)

KeyCorp (a key)

We’ll shift our focus now, as Cramer’s second high-yield stock is Bancorp, KeyCorp, the holding company that owns KeyBank. This large-cap banking company operates through more than 1,000 full-service branches and libraries, as well as approximately 1,300 ATMs, in 15 states, and has more than $181 billion in total assets.

This is a strong foundation to support the business, and KeyCorp has been successful in doing so for nearly 200 years. The company offers a full range of banking services, including loans, savings and checking accounts, online and mobile banking, mortgages, and wealth management – all familiar banking needs – to retail, small business and commercial clients.

In the last second quarter of 2022, the company’s total revenue was $1.8 billion, in the $1.7 billion to $2 billion range it has generated over the past eight quarters. In terms of earnings, KeyCorp reported net income of $504 million, up 20% year-over-year, while earnings per share were 54 cents per diluted common share. That was down from the 72 cents reported in last year’s quarter, but it’s still solidly profitable — and more than enough to cover 19.5 percent of the common stock dividend.

These earnings were last announced in July for the September 15 batch. At its current rate, the dividend is paid out annually to 78 cents and yields 4.8%. The dividend’s long reliability history — the company has never missed a payment, since 1990 — helps explain why it’s retaining Kramer’s interest.

KeyCorp has overhauled its business practices in recent months, 5-star analyst Gerard Cassidy From RBC sees this as a net positive.

“The rebuilt KEY, risk removal, and better management continues to prove to investors that it is not ‘key old’. This change can be seen in its robust credit metrics and diversified business model. Its ‘target metric’ strategy, which is not all things to all customers but is relevant Relevancy to the clients that KEY wants to be relevant has boosted shareholder returns, in our opinion. In addition, a strong “right side” of the balance sheet will become more valuable in a high interest rate environment. Finally, KEY must continue to reward shareholders with capital action plans Strong in 2022-2023,” Cassidy said.

Cassidy measures his comments with an Outperform rating, as well as a $29 price target indicating a 79% upside potential in the next 12 months. (To watch Cassidy’s record, click here)

Overall, KEY gets a moderate buy from analysts’ consensus, based on ratings of 6 buy, 7 barriers, and 1 sell. The average target price per share of $22.19 gives ~37% upside to the current price of $16.17. (See KEY stock forecast on TipRanks)

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disclaimer: The opinions expressed in this article are only those of our featured analysts. The content is intended for informational use only. It is very important to do your own analysis before making any investment.