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Cramer's Defensive, Dividend-Paying Play

"This is a difficult market and that means we need to circle the wagons around stocks with big dividends, especially defensive dividend names that don’t need a healthy economy for business to be good," Cramer said Thursday. "And thanks to the across the board beating we’ve taken in recent weeks, there are now a lot of companies with higher yields because their stocks have been pushed relentlessly lower."

Take big pharma, for example. Cramer noted Merck , Eli Lilly , Sanofi-Aventis , GlaxoSmithKline and AstraZeneca are all yielding more than 5 percent. The best yielder to buy, though, is Sanofi. With headquarters in France, its stock has been hammered lately. The stock fell 7.4 percent on Wednesday, as the French stock market tumbled thanks to rumors that a few big French financials might be in trouble, Cramer said.

"That’s a problem, sure, but what the heck does it have to with Sanofi?" Cramer said. "This is a drug company for heaven’s sake—that’s as defensive as it gets."

Besides, Cramer noted France only makes up 10 percent of Sanofi's revenues. Yet the market sold all things France-related, including Sanofi's stock, giving investors a great opportunity to buy shares at discount.

Sanofi currently trades at just 6.9 times next year's earnings estimates with a 5.4 percent yield, Cramer said. On a price to earnings multiple basis, he noted it's much cheaper than other 5 percent yielding big pharma stocks. AstraZeneca trades at 7.1 times earnings, Merck trades at 8 times, Lily trades at 9.3 times and GlaxoSmithKline trades for 9.6 times earnings.

Like other pharma companies, Sanofi faces serious generic competition over the next few years, as some of its biggest drugs go off competition. Plavix, which prevents blood clots that can cause strokes and heart attacks, goes generic in 2012, but Cramer said that's already baked into its stock. Besides, the company is doing a lot of overcome generic threats. The company also has a diverse array of businesses it continues to grow.

The company was also helped by its $20 billion purchase of Genzyme earlier this year, Cramer said. Genzyme's orphan drugs treat rare disease and in turn, have very strong pricing.

Cramer thinks Sanofi is a steal at current levels. He recommends putting on a starter position and then scaling into it slowly as the stock goes lower.

When this story was published, Cramer's charitable trust owned Sanofi-Aventis.

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