Health-care reform is now law, but it comes at some cost to investors. Because part of the bill that President Obama signed on March 23 includes increased taxes on capital gains and dividends.
Now, Cramer always has recommended dividend stocks as great protection again economic and market volatility. But if investors are pocketing less money as a result of higher taxes, then this strategy has to change.
The solution then, as he sees it, is to find even bigger dividend yields. That way investors still can generate a significant amount of cash even after Uncle Sam gets his share.
To aid you in your search for these high-yielders, Cramer pulled together a basket of some of his top dividend-paying companies. It’s a starter kit of sorts, a diversified mini-portfolio that should protect investors against the tax man.
Read on for Cramer’s 5 Obama-Proof Dividend Plays.
BP yields 5.8%, but Cramer likes the expected cost cuts and the growth. The latter comes thanks to last week’s purchase of Devon Brazilian and Gulf of Mexico properties.
Cramer's charitable trust owns BP.
What was once a play on housing, and even pharma, is now an investment in emerging markets, Cramer says. And DD yields 4.4%. The company has paid 422 consecutive dividends, and Cramer fully expects that trend to continue.
This natural-gas pipeline play isn’t exposed to the commodity’s prices, which is why Cramer likes it so much. Well, that and the 6.5% dividend yield.
Cramer wanted a utility in his basket of Obama-proof stocks, and therefore gave the nod to telco. He thinks there’s a good chance VZ will boost its dividend, which should boost the 6.3% yield, too.
This company has increased its dividend for 42 straight years, and Cramer doubted that health-care reform would prevent a 43rd. LLY yields 5.4%.
Altria is Cramer's alternate for the group. The cigarette maker is a less politically correct play than DuPont, but it yields 6.8%. Investors who switch out DD for MO will enjoy an average return of 6.2% from Cramer's "Obama-Proof Dividend Plays" basket of stocks, versus 5.7% if they go with DuPont instead.
Cramer's charitable trust owns Altria.