Cramer: Check Out This Sky-High Dividend Yielder

"If this increasingly volatile market has you on edge, maybe it's time to double down on a stock that gives you the security of a sky-high dividend yield," said Jim Cramer.

The Mad Money host was talking about Linn Energy (TICKER:LINE) the master limited partnership that's also the 12th largest independent oil and gas exploration and production company.

The dividend yield on this stock was well over 7% on Wednesday February 27, 2012 – the day the segment aired.

As you may know dividend yield is a tricky metric because it's calculated by taking annual dividends per share and dividing it by price per share.

Annual Dividends Per Share
Price Per Share

That means yield increases one of two ways: 1) if dividends go up or 2) if share prices goes down.

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However, Cramer thinks this is a case where you can feel good about the high yield - that it reflects strong dividends.

"Linn just reported an excellent quarter last Thursday with tremendous production growth of 88% versus last year," he said.

"Also, last week the company announced that it is buying Berry Petroleum for $4.3 billion, and I think this is a brilliant deal. Berry brings some high quality assets in California and Texas. And perhaps more important, in the first year after the deal closes, it's expected to add more than 40 cents to Linn's distributable cash flow per unit."

Cramer thinks the merger could be huge for Linn's future.

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"And remember, if you want to own this for a tax favored account like a 401K or an IRA, you can buy LinnCo, the subsidiary that's a regular corporation and therefore doesn't come with all of the tax baggage of a master limited partnership, like the parent."

It's worth noting the company has come under fire for its hedging program—they hedge 100% of their expected oil and gas production for 4 to 6 years down the road using a mix of swap contracts and put options. Some critics don't like the way the company accounts for these hedges. Jim Cramer talked with Mark Ellis, the chairman and CEO of Linn Energy about the issue. You can see the entire conversation in the video above.

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