Jim Cramer says oil is the ‘only dip that can be bought right now’

“I want to be kind to this market and tell you it’s the same old buy the dips game plan. But in reality, the only dip that can be bought right now, at least, is the dip in oil,” Cramer says. “Everything else is, as they now say in a damning way, transactional and nothing more.”

3 oil stocks paying dividends

The Mad Money host notes that when sellers start selling oil stocks, buyers would come in and keep the prices up. And that makes the sector stand out compared to the rest of the market.

“Prices are going higher at the pump, and nobody but the president can do anything about it — and even he can’t do all that much,” he explains. “Either way, the lesson is simple: Just get long on some oil stock.”

So here’s a look at three stocks from the sector that Wall Street finds attractive. What's more, they pay healthy dividends.

Exxon Mobil (XOM)

Let’s start with one of the largest blue-chip stocks in the energy space: Exxon Mobil.

Thanks to strong commodity prices, the oil-producing giant gushes profits and cash flow. In Q1, Exxon earned $5.5 billion in profits, a huge increase from the $2.7 billion in the year-ago period. Free cash flow totaled $10.8 billion for the quarter, compared to $6.9 billion in the same period last year.

Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 88 cents per share, translating to an annual yield of 3.4%. Management has also increased the company’s share repurchase program to up to $30 billion through 2023.

On Tuesday, Evercore ISI analyst Stephen Richardson upgraded Exxon from ‘in line’ to ‘outperform’ and set a price target of $120 — implying potential upside of 15%.

Enterprise Products Partners (EPD)

Moving up the yield ladder we have Enterprise Products Partners, which operates approximately 50,000 miles of natural gas, natural gas liquid (NGL), crude oil, refined products, and petrochemical pipelines.

Structured as a master limited partnership, EPD pays oversized cash distributions to investors and grows them over time. Right now, the stock yields a generous 6.5%.

The partnership is outearning its payout. In Q1, EPD generated record distributable cash flow of $1.8 billion, which provided 1.8 times coverage of its quarterly distribution.

After EPD reported Q1 results, Mizuho analyst Gabriel Moreen reiterated a Buy rating on the stock and raised the price target from $30 to $32 — roughly 12% above where the stock sits today.

Magellan Midstream Partners (MMP)

Magellan Midstream is another high-yield master limited partnership well-positioned for this commodity cycle.