Good companies typically offer more and more bountiful dividends, Jim Cramer said Monday on CNBC's "Mad Money," because it’s a sign management believes in the future and has long-term confidence.
As avid viewers know, Cramer likes dividends because they pay a rate of return that certificate of deposits can’t match. Of course, stocks present more risk than CDs, but they can also go a lot higher. Many companies increase their dividends year-over-year, too.
(RELATED: Cramer's Top Dividend Stocks)
When it comes to earnings, then, it’s important to listen to whether management indicates if it will boost the dividend.
“We look for signals about the future on these calls, particularly about upcoming catalysts that will move the stocks later on, making them solid buys on any short term decline,” Cramer said. “And we try to measure confidence about cash flow that can ultimately trigger rising dividends, the best source of wealth that stocks can give us.
“Remember, dividends pay us to wait for things to get better and there is no better way to find out about the prospects for increased dividends than to listen to the earnings calls.”
—Read on for Cramer’s Ultimate Growth Stocks
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