Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday October 31.
Over There: Verizon (NYSE:VZ), Nucor (NYSE:NUE), KBR (NYSE:KBR), Alberto-Culver (NYSE:ACV), Procter & Gamble (NYSE:PG)
Moving on to dividend stocks, Cramer discussed Boardwalk Pipeline Partners, a master limited partnership that operates two gas pipelines. MLPs are required to pay out their cash flow in tax deferred dividends, and BWP currently yields 8.25% and is expected to increase its yield to 9%. If the stock price falls, the dividend will only increase further. Since MLPs can be complicated, Cramer suggests investors talk to their tax advisors to ensure they are deriving the full benefits. BWP’s dividend is secure given the $1 billion investment from the Tisch family and three expansion projects which are expected to help double the company’s revenue by 2012.
Marathon announced a potential breakup on its earnings call, and Cramer says the sum of the company’s parts is greater than the whole. The combination of a refinery and production and exploration business is “too complicated” for The Street, and a split will be profitable; while at $29, MRO is 50% down from its high, its refinery business alone would be worth $20-$24 and the exploration and production business may range from $49-$73. Both business have concrete plans for expansion, but even if Marathon doesn’t break up, the stock is down so far that an upside is on the horizon, and the company might be taken over. In any scenario, investors can sit back and enjoy the 3.6% dividend while waiting for Marathon to make its move.
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