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Did the Fed Just Create a Bull Market in Dividend-Paying Stocks?

Wednesday, 1 Aug 2012 | 6:17 PM ET

Did U.S. Federal Reserve Chairman Ben Bernanke just create a bull market in dividend-paying stocks?

United States Federal Reserve
Tetra Images | Getty Images
United States Federal Reserve

Mad Money” host Jim Cramer certainly thinks so.

On Wednesday, the Federal Reservestopped short of offering new monetary stimulus even as it signaled more strongly that further bond buying could be in store to help an economic recovery that it said had lost momentum this year.

Fed officials described the economy as having "decelerated somewhat," a change of tone from its previous assessment in June when it said the economy had been "expanding moderately."

Cramer Translates What the Fed Said
My takeaway from what the Fed said today is to continue focusing on high yielding dividend plays, says Mad Money host Jim Cramer.

The Fed's policymakers also reiterated their disappointment with the slow pace of progress in bringing down the nation's 8.2 percent unemployment rate.

In Cramer’s opinion, though, the most important revelation was that the Fed will continue to hold interest rates low through at least 2014 and continue Operation Twist through the end of the year. After all, Cramer said the low rates means Treasury bondswon’t provide investors much of a return. Therefore, dividend-paying stocks just became much more attractive, he said.

“Our stock market’s up double digits for the year and it’s being led by the group that Bernanke’s backhandedly telling you to buy: companies with high yields that can raise their dividends at a time when business isn’t any good,” Cramer said. “With his weapons and pronouncements, he’s created a bull market in high-yielding big capitalization stocks.”

—CNBC.com and Reuters contributed to this report

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