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Investors are torn between the high risk of European bank insolvency and the upside of owning equity over the long term. Jim Cramer is no exception to this. Conventional wisdom would dictate that investors buy bonds and stocks that pay dividends.

Jim Cramer, host of CNBC’s Mad Money, made 73 calls between December 9 and 16. 44 were “buys” and 29 were “sells.” Of these calls, 7 stocks that pay a healthy dividend are worth further investigation.

Name

Call

Yield

Div/Share

Date

Annaly Capital Management Inc (NYSE:NLY)

Buy

14.8

2.4

12/9/2011

Transocean Ltd (NYSE:RIG)

Sell

7.9

3.16

12/13/2011

Verizon Communications Inc. Com (NYSE:VZ)

Buy

5.2

2

12/12/2011

Eli Lilly and Company Common St (NYSE:LLY)

Buy

4.9

1.96

12/15/2011

Paychex, Inc. (NASDAQ:PAYX)

Buy

4.4

1.28

12/16/2011

Huntsman Corporation (NYSE:HUN)

Sell

4.2

0.4

12/9/2011

Darden Restaurants, Inc. (NYSE:DRI)

Sell

4

1.72

12/9/2011

The biggest value traps in an environment where interest rates are low comes from stocks that pay an unusually large yield. If it’s too good to be true, it usually is.

[1] Annaly Capital Management (NLY) is an “mREIT” or Mortgage REIT. The company holds $113B in assets and owns the largest agency MBS portfolio. The value of the company lies in its management team who must manage exposure to prepayment risk.

After falling over 51% from its 52-week high, [2] Transocean (RIG) saw its dividend yield rise to 7.9%. Shares now trade at close to a low for the year, at $39.83. Cramer rated the company as a “sell.” Is this call justified? In its fleet status report, Transocean illustrated significant changes to its existing contracts and estimated out of service time compared to its November status report.

On the telecommunications side, [3] Verizon (VZ) was ranked a “buy.” The company pays a yield of 5.2%. This yield is below the payout offered by AT&T (NYSE:T), whose proposed purchase of T-Mobile dominates share price movement. Still, AT&T raised its quarterly dividend by a penny to $0.44. That would increase AT&T’s yield to 6.1%.

In the pharmaceutical sector, [4] Eli Lilly (LLY) was ranked a “buy.” The stock pays 4.9%, even though shares closed at $40.53, up over $4 in less than a month. At $41.22, shares trade well above the average $37.50 target set by analysts.

[5] Paychex (PAYX) was given a “buy” by Cramer. The company’s yield is 4.4% after a $29.59 closing price. Investors buying Paychex for its yield will be exposed to the upside of improving employment, but downside exists if Europe’s sovereign debt crisis worsens. Paychex reports earnings on December 21.

[6] Huntsman Corporation (HUN) with a yield of 4.2% and a share price of $9.70, is down 53.80% from its 52-week high. Cramer rightfully called Huntsman a “sell.” Its CEO recently said on Bloomberg that capacity utilization of its product will be constrained. The company reported a net loss of $0.14, compared to a $0.23 earnings per share the year before.

[7] Darden Restaurants (DRI) was ranked by Cramer as a “sell.” The company pays a dividend of $1.72. Higher costs and weakness in its Olive Garden chain led to a margin decline to 25.4% compared to 28.7%. The 16% rise in food and beverage costs contributed to this decline.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 High Dividend Stock Calls From Jim Cramer