Cramer’s breaking out his trusty Shakira theorem to explain aristocrat stocks – those companies that have increased their dividends every year for the past 25 years. Owning these kinds of stocks is like being born into old money: they keep paying you more every year to do nothing.
Sometimes dividends will lie, but not when they’ve been steadily increased every year for two and a half decades, Cramer says. Now, talking dividends isn’t as interesting as talking speculation, but they mean money in your pocket and provide a hedge against downside. This is why Cramer wants you in an aristocrat.
He was going to recommend Walgreen as an aristocrat pick, but he had to cut it because he thinks they will buy Express Scripts, which could put an end to dividend increases. He also had WW Grainger on his list, but he had to cut them too because the stock is just too cyclical.
That leaves ADP, Cramer’s number-one aristocrat. It’s a transaction-processing company that manages payroll, benefits and retirement services for employers. ADP also works with car dealers, helping to manage sales, accounting and inventory. It spun off its brokerage services division, which Cramer likes because it’s a tough business with lower margins than the others, he says.