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Dec.02
6:12 PM ET
Tuesday, 2 Dec 2008
Cramer: Buy Big Dividends

Add Energy Transfer Partners to Cramer’s list of high-yielding stocks to own.

ETP’s [ETP  Loading...      ()   ] like another Mad Money favorite, Kinder Morgan Energy Partners [KMP  Loading...      ()   ], in that it’s a master limited partnership. That means most of the profits are returned to shareholders through a massive dividend payout. How much? ETP offers 11.8%.

Don’t think lower energy prices are going to affect that dividend either. ETP gets 90% of its EBITDA from pipeline transportation, i.e., moving natural gas rather than drilling for it. So ETP’s earnings should hold up regardless of the commodity’s market value.

ETP is a strong company – it reported 93 cents a share last quarter when the Street was expecting only 44 cents – and there are big projects in store that should keep the dividend growing. Also, company insiders have been buying stock hand over fist, and that usually means good things are on the horizon. The only reason ETP’s stock is down is – you guessed it – hedge-fund selling. Funds have been unloading ETP to meet client redemptions, and that’s hurt the share price.

But that only drives up the yield. Investors who buy ETP now, and continually reinvest the dividends, will double their money in just over six years. And given the good business behind this stock, ETP is one of the few safe plays you could find in this market.






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