Cramer: 3 New Dividend Plays
Investors have continued their flight to safety, choosing to hide in CDs and bond funds. They seem to think it’s the smart play, a better move than buying stocks that they can’t quite trust 100%.
But “that’s a mistake,” Cramer said during Tuesday’s Mad Money.
There are many companies right now that offer better yields than Treasurys and hold the potential for upside. Cramer all week is focusing on these very stocks. On Monday, he put the spotlight on General Mills, Pfizer , and AT&T , and today he recommended Altria , Waste Management and 3M .
Altria is now a “steady domestic tobacco company,” Cramer said, after spinning off Kraft Foods and Philip Morris International . What’s left is a market leader in US cigarettes and smokeless tobacco, as well as a 28% stakeholder in SABMiller, the second-largest brewer.
MO, currently yielding 6.8%, has returned as much as 504% to shareholders over the past 20 years, as long as the dividends were reinvested. The S&P 500, however, lost 25% during that same period. The company earns enough to cover its $1.36-a-year payout, Cramer said, and he recommended buying Altria before Dec. 24. That’s the “must-own date,” or the deadline for buying MO if you want to collect the next quarterly dividend.
Then there’s Waste Management WM. Cramer likes the company for its strong market-share position in waste removal/disposal and landfill facilities, which come in at 30% and 40%, respectively. That gives the Waste Management pricing power, a handy trump card during a recession. For example, WM upped its municipal solid waste fees by 3% in the third quarter despite a 6% volume. The company just boosted its dividend on Dec. 17 by a whopping 8.6%, to 3.8%. The must-own date for WM’s next payout is March 3.
Lastly, there’s 3M, a diversified industrial firm that Cramer called the “perfect proxy for any rebound in the market.” That’s because 3M makes everything from Post-It notes to glass computer screens to health-care products to scotch tape. Investors might not know that this company invents and develops many of the products it sells, which represent 29% of sales. Also, 3M earnings 70% of revenues from outside the US, making it a great play on the global recovery and the weak dollar.
3M pays out a smaller 2.5% dividend yield, but the company has consistently raised it for over half a century. The last increase came in February, Cramer said, “So I think we could be due for another one in the not-too-distant future.” Maybe as soon as this February.
Forget about bonds and CDs if you want security and income, Cramer said. The best, most responsible, investments right now are dividend raisers like Altria, Waste Management and 3M.
“They’re the gifts that keep on giving,” Cramer said.
A previous version of this story misstated Altria's must-own date as Thursday, Dec. 31. The correct date is Thursday, Dec. 24.
Cramer’s charitable trust owns Altria.
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