Jim Cramer on KeyCorp (KEY): “Two Hundred Years and Still Yielding 5.65%”
63min read Amid the volatility of 2025 markets, Jim Cramer has once again turned his spotlight to KeyCorp (KEY), a regional banking giant with a dividend yield that has defied economic headwinds. In a recent segment on Mad Money, Cramer highlighted the bank’s resilience, its strategic partnerships, and its status as a “reliable operator” in an era of AI-driven speculation. But what makes KeyCorp’s 5.65% dividend yield—a figure Cramer cites as emblematic of its long-term stability—worthy of investor attention?
Ask Aime: What factors contribute to KeyCorp's resilient dividend yield?
A Legacy of Dividend Discipline
KeyCorp’s dividend history stretches back decades, though Cramer’s reference to “two hundred years” likely alludes to the banking sector’s enduring role in American commerce. While keycorp itself traces its origins to 1844, its modern dividend consistency began in 1985. Today, it pays a quarterly dividend of $0.205 per share, translating to a current yield of 5.8% as of mid-2025. This aligns closely with Cramer’s cited 5.65%, rounding differences likely reflecting timing or reporting nuances.
Cramer’s endorsement hinges on KeyCorp’s ability to sustain dividends even as regional banks face headwinds. In Q1 2025, KeyCorp reported $370 million in net income, a 16% year-over-year revenue increase, and a Common Equity Tier 1 (CET1) ratio of 11.8%—well above regulatory “well-capitalized” thresholds. These metrics bolster its capacity to weather economic downturns, a key factor for income-seeking investors.
The Scotiabank Boost and Strategic Repositioning
A critical tailwind for KeyCorp is its partnership with Scotiabank, which invested $2.8 billion in tranches to secure a 15% stake. This infusion strengthened KeyCorp’s liquidity and capital buffers, a move Cramer praised as a “strategic win” during CEO Chris Gorman’s April 17 appearance on Mad Money. The deal not only alleviates regulatory concerns but also positions KeyCorp to capitalize on trends like “reshoring”—the repatriation of manufacturing to the U.S.—which Gorman noted as a growth catalyst for its commercial banking services.
Cramer’s YEV Framework: A Defensive Gem in a Growth-Driven Market
Cramer’s YEV (Yield, Earnings Growth, Value) criteria rank KeyCorp 5th among stocks he follows, underscoring its appeal as a defensive play. KeyCorp’s 6.4% projected dividend yield (per analyst forecasts) exceeds the 10-year Treasury rate (~4%), while its forward P/E of 14x trails the S&P 500’s 21x multiple. These metrics suggest undervaluation, particularly given its 11.5% dividend growth rate and improving earnings trajectory.
Yet Cramer’s enthusiasm is tempered by market dynamics. While he acknowledges KeyCorp’s stability, his “conviction” leans toward AI stocks, which trade at valuations like 5x earnings—a stark contrast to KeyCorp’s 14x. This reflects a broader theme: investors in 2025 prioritize high-growth sectors over income plays, even as KeyCorp’s dividend remains a reliable feature.
Risks and Considerations
KeyCorp’s -689% payout ratio (current) raises red flags, as dividends currently exceed earnings. However, the projected 47.8% payout ratio by 2028 hints at improving profitability, supported by rising net interest margins (+17 bps in Q1 2025) and deposit growth (+4% YoY).
Additionally, KeyCorp’s $1 billion buyback program and Q2 2025 results (reported July 22) could further stabilize its share price, which had fallen 18% year-to-date by April. Analysts like Evercore ISI’s John Pancari, who raised his price target to $20, argue that the stock is undervalued relative to its fundamentals.
Conclusion: A Dividend Anchor in a Volatile Market
Jim Cramer’s praise for KeyCorp (KEY) centers on its 5.8% dividend yield—a figure close enough to his cited 5.65% to justify the rounded phrasing—as a rare safe haven in 2025’s turbulent markets. With a 11.8% CET1 ratio, strategic partnerships, and a dividend growth rate of 11.5%, KeyCorp offers income investors a stable counterbalance to AI-driven speculation.
However, risks remain: its current unprofitability, competition from high-growth sectors, and a stock price still reeling from April’s selloff. For long-term investors prioritizing yield and capital preservation, KeyCorp’s dividend—and its forecasted 6.4% yield by 2028—may justify a position. Yet, as Cramer notes, those seeking short-term gains may find better opportunities elsewhere.
In the end, KeyCorp’s legacy of reliability, fortified by its Scotiabank partnership and improving fundamentals, positions it as a dividend stalwart—worthy of consideration even in an era of rapid technological change.
This analysis synthesizes KeyCorp’s financial strength, Cramer’s strategic insights, and market context to provide a balanced view of its investment merits.
