Mad Money

Dialing Up Defense

Retail isn’t looking all that good these days, Cramer says. So he wants you playing defense, and he wants you to start now. Tonight, he’s offering up three telecommunications plays, classic market defense, to try to keep you making money while other stocks falter.

Home Gamers know that Cramer is a big cheerleader for AT&T. The stock has been performing well, and he’s loved the dividend. But AT&T might have run enough that it’d be worth considering another major telco player: Verizon.

Dividend support is important when you’re playing defense, Cramer says, and right now VZ has a 4.3% yield. AT&T, because of its run, is only offering 3.7%. That higher dividend offers more protection just in case Verizon stock takes a hit – not that Cramer thinks it will.

Verizon has just come off a good quarter, too. Wireless customers grew 14.5% year-over-year, and VZ’s retention rate is still number one in the industry. Even still, Cramer says the key factor to watch is the triple play – phone, cable and internet. Verizon is now offering its own fiber-optic version of this popular communications package, and it has shown great accelerating revenue growth, which the Street loves. Cramer thinks that Verizon could become the one-stop shop for all your telco needs: wireless, landline, internet and television.

Bottom Line: Cramer thinks retail is crumbling, which means it’s time to go on the defensive. Telco is a great way to do it, and a big phone company like Verizon could be the right pick.

Questions? Comments?