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Five High-Yielding Stocks to Own

Friday, 4 Apr 2008 | 8:11 PM ET
Cramer: Dividend & Conquer
Searching for stocks with big dividends, with Mad Money host Jim Cramer.

Low interest rates and low economic growth have Cramer thinking you should play it as safe as possible. During times like these he turns to high-yielding stocks because they offer a better return on your cash and some much-needed stability.

But not just any stocks will do. Every portfolio must be diversified. And those dividends should be safe and there has to be a chance the companies will raise them in the near future. Cramer said he found five stocks that fit these criteria perfectly. Here’s the breakdown:

Dow Chemical , an industrial company, pays out 4.2%. The financials aren’t that great, but Cramer said he likes that Dow operates in a real economy, meaning it’s not tied to the credit crisis. There’s enough cash flow to keep the dividend safe, and 65% of the business is outside the U.S., so our economic woes aren’t too much of a concern.

Permian Basin, a U.S. energy trust dealing in oil and natural gas, offers 9.8%, though it’s not taxed at the normal 15% rate. Investors pay regular taxes on PBT, so Cramer recommended this stock for an IRA or 401(k) as a way to defer those taxes for as long as possible.

Entertainment giant WWE carries with it a 7.8% yield, and the company earns a quarter of its sales from overseas.

CPFL Energia is the largest electric utility in Brazil, and it’s still growing. That should fuel some increases to the already-sufficient 5.9% yield.

Lastly, Cramer likes healthcare REIT HCP . This is another dividend that’s taxed regularly and not at the lower 15%. So to take full advantage of the 5.2% yield, put it in your IRA or 401(k).

Taken together these five stocks pay out an average 6.6%, much better than the S&P 500’s 2.2%. Even after taxes, you’re earning 4.7%. As Cramer said, there might not be anything better than a stock with a high yield. Here’s your chance to take advantage of five of the best.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
CPFE
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DOW
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HCP
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PBT
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WWE
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