Cramer’s reason for liking dividend-paying stocks hasn’t changed: They can offer great protection in a volatile market. But these days there are two kinds of dividend plays that he recommends.
First, the classic “accidental high-yielders.” These are the stocks with small payouts that wouldn’t ordinarily offer high yields. But because of downward pressure in the markets, which has hurt their share prices, those yields have shot up. Now investors get more bang for their buck.
The added benefit of owning these kinds of stocks is that the newly high yields attract new buyers, and that puts a floor in the share price. So not only do investors get to collect the payout on the way down, but they can also ride the stock higher on the way back up.
Then there are the dividend boosters. These stocks may not boast high yields, but the simple fact that the underlying companies felt confident enough to raise the dividend can be reason enough to buy. In fact, a small basket of these boosters that Cramer recommended back in February has outperformed the S&P 500 since then, even during the wild swings caused by Europe.
We pulled together the best of best of these two kinds of dividend plays – Cramer’s 13 favorite names right now. Read on and pick one or two for your portfolio. They could offer just the kind of defense that you need.
Posted 16 June 2010