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A Smokin' Good Dividend

Friday, 17 Aug 2007 | 10:22 AM ET

Even with the late rally the market saw today, investors should be focused on playing defense, Cramer said.

Dividend Stocks
Not all dividends are created equally, according to Mad Money host Jim Cramer. That's why he's taking a look at Reynolds American.



“Your goal should be capital preservation, not capital appreciation,” he said. “Protect your money. Don’t try too hard to grow it.”

One of the best ways to do that is to find stocks with good dividends. Cramer likes companies that recently boosted their dividends because it usually means there’s no chance that dividend will be cut, he said.

Reynolds American upped its dividend 13% to 5.5% less than a month ago. And when it comes to defense, “nothing is more defensive than cigarettes,” Cramer said. People who smoke continue to no matter which direction the market is heading.

RAI is not a sexy stock. Cramer doesn’t expect it to yield a huge return. But RAI should protect investors’ cash and offer “a big chunk of income besides.”

Reynolds American may make a filthy product, “but the stock has a beautiful dividend,” Cramer said. “This one is your shelter from the storm.”

Questions for Cramer? madmoney@cnbc.com

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