Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday May 30.
It is a fact that 40% of gains in stocks come from reinvested dividends. With bond yields at a ten year low and lacking the tax advantages of dividend-yielding stocks, investors should buy stocks, not bonds. Cramer selected 5 stocks with a solid track record of increasing their dividends. He said these are "not just dividend aristocrats, they are dividend royalty."
Con Edison (ED) yields 4%, and since it is involved in transmission and distribution of energy, it is not as vulnerable to EPA regulations as utilities are.
Sherwin Williams (SHW) yields just 1.2%, but it raises its dividend by 20% annually. The paint business is strong and raw costs are coming down; an upside is in store for SHW.
Abbott Labs (ABT) has a 3.3% yield and is growing its dividend payout by 14% per year. The company is unlocking value by splitting up.
Pepsi (PEP) yields 3.1%, is growing its dividend by 12% annually and is a turnaround story with declining raw costs.
Target (TGT) has a 2.1% yield, is growing its dividend by 11%. The stock has moved up quite a bit, and Cramer would wait for a dip before buying, but TGT is not levered to Europe and will benefit from falling gas prices.
Cramer took a call:
Newcastle Investment (NCT) has a 12% yield, but Cramer says until investors are sure about what NCT owns, they shouldn't buy the stock.
Any illusions that Research in Motion (RIMM) might be making a comeback should be abandoned. The company has not invested enough in its technology and is quickly losing ground to competitors. Some consider it a "buy"on the possibility of a takeover bid, but Cramer doesn't believe it is a good idea to buy a stock with poor fundamentals in hopes that it will be bought. In any case, RIM is opposed to such a takeover. Cramer would buy Verizon (VZ) instead, especially since it has a 4.8% yield.
Facebook (FB) has been a "dark comedy," and those who felt the stock would gain footing have been proven wrong. Cramer would buy Apple (AAPL) instead, since it has a clean balance sheet and fantastic new products.
Morgan Stanley (MS) is a battleground between bulls and bears, and there is no letup in sight. It has a poor balance sheet and is among the weakest of U.S. banks. Wells Fargo (WFC), which should benefit from the housing turnaround, is a better bet.
Cramer took some calls:
Linkedin (LNKD) has received an upgrade and is seeing huge revenue growth. However, investors should not chase after growth at the expense of earnings.
Diana Shipping (DSX) along with other shipping plays, is a no-go area with the Baltic Dry Freight Index declining. In fact, this number is "one of the most discouraging statistics out there."
CEO Interview: David Wenner, B&G Foods (BGS)
B&G Foods (BGS) is a great way to protect a portfolio against economic uncertainty. Its brands, Ortega, Cream of Wheat, B&G Pickles and other favorites are household names, and the stock yields 4.6%. BGS is up 83% since last year and has seen a 95% gain since Cramer got behind it in 2010. BGS buys neglected brands and revamps them. It recently bought Static Guard, a non-food brand, which has virtually no competition. CEO David Wenner would consider a new acquisition "as long as it is in a niche and it is defensible." Mrs. Dash, for instance, has strong customer loyalty and 80% market share in salt substitutes. The company should benefit from falling commodity costs. Cramer is bullish on BGS.
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