Tuesday’s market action provided a glimpse into what the market wants and want it doesn’t want, “Mad Money” host Jim Cramer told viewers.
First, what worked—Mattel and Limited Brands .
Mattel reported better-than-expected earnings Tuesday, but that’s not why Cramer thinks the stock rally. He said it was the company’s decision to boost its dividend by 35 percent to $1.24 a share. Mattel now yields four percent.
Limited Brands also announced a dividend boost Tuesday. It raised its dividend by 25 percent to $1 a share.
Exxon Mobile and RadioShack , on the other hand, are examples of what the market doesn’t want.
Exxon Mobile “delivered a terrible quarter,” Cramer said. While it did boost its dividend by 7 percent, it still has a relatively low 2.2 percent yield. He thinks the company should have used the money it spent purchasing XTO Energy and on a $22 billion buyback to pay a much larger dividend instead. That would have given shareholders a much better return, he said.
As for RadioShack, it has “redefined the term pathetic,” Cramer said. It pre-announced a “horrendous” number and is blaming Sprint for its poor performance. To fix things, Radio Shack has decided to suspend its buyback.
The bottom line—"You raise the dividend big, a la Mattel and Limited Brands, and the buyers come a calling,” Cramer said. “You give us no growth and waste a huge amount of money buying back stock? The shareholders head for the exits. And who can blame them.”
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