U.S. stocks rose on Tuesday as investors bet European leaders would take strong steps this week to end the region's debt crisis. According to a published report that cited senior European officials, European leaders will discuss boosting the firepower of the euro zone's rescue fund at a summit scheduled for Thursday and Friday. France and Germany are expected to try to force changes to EU rules to impose mandatory penalties on countries that exceed deficit targets in hopes of restoring market confidence.
The news renewed optimism on Wall Street, as the Dow Jones industrial average gained 52.30 points, or 0.43 percent, to 12,150.13 and the Standard & Poor's 500 Index added 1.39 points, or 0.11 percent, to 1,258.47. While Cramer welcomed the gains, he cautioned investors not to get too optimistic, too soon.
“We have gone from believing the financial world is coming to an end a fortnight ago to believing that the French and the Germans are going to be able to solve all of Europe’s problems and we’ll be able to live happily ever after,” Cramer noted. “Don’t get me wrong, I'd love to live happily ever after, but in the interim, you do mind if I get paid to wait?”
The “Mad Money” host reiterated his “paid to wait” concept, which involves investing in dividend-paying stocks. Despite economic events or how the overall stock market is faring, high yielding stocks pay investors to wait until things getting better. These stocks could go up or down, but the investor gets the dividend payment nonetheless. Cramer likes 3M , General Electric and Eli Lilly , for example. Each of these stocks has had little movement lately, but each pays a juicy dividend yield. 3M has a 2.8 percent yield while GE pays a 3.7 percent dividend yield and Eli Lilly yields a whopping 5.2 percent.
“You need dividend payers like this in case Europe falls apart all over again, something nobody seems to be expecting at the moment even as the likelihood that things go wrong over there is still pretty high,” Cramer explained. “Even if the stocks have done nothing or next to nothing, your wallet’s fatter just for owning them. That’s the main reason I keep stressing dividends and the need to reinvest those dividends back into the stocks to get ever larger amounts of cash from the companies.”
Read on for Cramer’s Top Dividend Stocks 2011
—Reuters contributed to this report
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