Cramer on Wednesday gleaned a wealth of information from what could be seen as the unlikely of sources. On a day filled with key testimony on Capitol Hill from Federal Reserve Chairman Ben Bernanke and Toyota MotorCEO Akio Toyoda and plummeting new-home sales, it was Dollar Tree’s earnings report that offered the best guide for investors.
Dollar Tree – which climbed $6, or 12%, today – saw its profits rise 32% in the most recent quarter, Cramer said, a sign that the consumer is “bummed” and “stretched.”
“You don’t go to Dollar Tree to feel good about yourself,” Cramer said of the discount store. “You go because you have to.”
Given that huge jump in profits, and the market’s reaction to the report, Cramer recommended that investors stick with what he calls trade-down names. Treehouse Foods, in particular, is a Mad Money favorite, and the stock is up 14% since CEO Sam Reed last appeared on the show.
But there is an even bigger takeaway here, Cramer said. If people are still pinching pennies, then the Fed most likely won’t be raising interest rates any time soon. Bernanke said as much today when he spoke to Congress. That means the return rates on bonds will also remain low, so investors should probably look elsewhere for a good cash payout.
The strategy then, Cramer said, is to look for dividends. Dividends provide a steady stream of cash, most often regardless of larger market issues. And they act as a cushion when share prices fall, as the decline pushes up the dividend yield, thereby attracting new buyers who buoy the stock. Also, these payouts are taxed at a much lower rate than other income, and they can return more cash to shareholders than Treasurys.
So who offers some of the best dividends right now? Cramer likes Kimberly-Clark , which just yesterday upped its payout another 10%. Altria increased its dividend to near 7% today, and Home Depot did the same yesterday after its most recent quarter.
There’s also Verizon Communications , which yields a nice 6.5%. The company’s chief financial officer, John Killian, told Cramer on Tuesday that capital expenditures or not VZ will continue to distribute some of its profits to shareholders.
Stocks speak loudly sometimes, Cramer said, and Dollar Tree right now seems to be screaming for investors to seek out dividends. So when that stock goes higher, consider high-yielders like Kimberly-Clark, Home Depot, Verizon and Altria.
Cramer's charitable trust owns Altria and Home Depot.
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