Cramer: Forget Bonds, Go With High-Yielding Stocks
Concerns over Europe’s ongoing debt crisis spurred a global race for safe assets Thursday, sending benchmark U.S. bond yields to record lows. In turn, 10-year Treasurys yields fell as low as 1.53 percent, the lowest ever on records going back more than two centuries, according to Reuters.
“If we can find stocks with yields that are higher than the return you’d get from U.S. Treasurys— stocks that aren’t particularly economically sensitive and have no exposure to a possible European implosion — then those stocks are getting more valuable, not less valuable, as the Treasury pays you less and less,” said Jim Cramer on CNBC’s “Mad Money.”
“Not only that, but we have companies in this country with much better balance sheets than the U.S. Treasury that are far more creditworthy.”
It seems investors are catching on to high-yielding stocks, too, Cramer said. When Treasurys spiked and stocks fell sharply midday, Cramer noticed investors started buying shares of 3M, Honeywell International and United Technologies, all of which pay juicy dividend yields.
(RELATED: Cramer's Top Dividend Stocks 2012)
“I know more than half the stocks in the S&P 500 now yield more than Treasurys — an astounding figure. But I don’t care,” Cramer said. “I only care about the ones that will do just fine even if things get worse, much worse, in this country.”
Take Wal-Mart, for example. The retailer currently pays a 2.4 percent dividend yield. Not only does Cramer think the company will likely do better in a down economy, he suspects it’s bound to raise its dividend, too.
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—Reuters contributed to this report
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