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Cramer’s Top 5 Dividend Plays

“If I had to pick one attribute that I most like to see in a stock,” Cramer says in his new book, Getting Back to Even, “it’s a safe, sizable dividend.”

Once considered stodgy and boring, dividend-paying stocks were bought mainly for their dependable income stream. But these companies took on new meaning after the 2008 crash, at least for Cramer.

The declines we saw following Lehman Brothers’ collapse gave rise to a group of stocks that Cramer called the “accidental high yielders.” These were mostly cyclical companies that paid small dividends and, as a result, offered small yields. But when their share prices plummeted, the yields shot higher, even though the dividend itself never changed. That gave investors a “twofer”: The payout functioned as a cushion against further losses, and the economic sensitivity of the stocks meant they’d rebound when American business did. So, at least for time, investors got safety and growth, a rare combination indeed.

The traditional reason for owning dividend-paying stocks still holds, though. Cramer outlines the what, how and why of dividends in Getting Back to Even, so pick up the book if you want the complete primer. But to get you started, he pulled together a diversified list of five names that he calls his “Dividend Defensive Line.” Click through the slide show to find out who they are.

One last note: Remember that the numbers listed here were correct as of publish time. But they may have changed a bit since. So do the research to make sure these stocks still work for your portfolio before deciding to buy.

Posted 20 Nov 2009