While many investors have been going batty over bonds recently, CNBC star commentator Jim Cramer says dividend stocks are where the best opportunities lie.
“When it comes to racking up profits, dividends are the single most significant factor out there,” he said on his show “Mad Money.”
Borrowing from the research of University of Pennsylvania economist Jeremy Siegel, Cramer said that between 1926 and now, about 40 percent of the total return of the S&P 500 Index came from reinvested dividends.
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“Unlike bonds, high yielding stocks can raise their dividends,” Cramer said.
“Unlike supposedly risk-free investments (certificates of deposit or Treasury bonds), which are actually somewhat risky when you take into the account the risk of missing an opportunity to make money, dividend-paying stocks can go higher.”
Cramer scoffed at Treasuries. “Do you really want to invest the meager proceeds of a five-year Treasury note into another five-year note? Do you think that’s how you build wealth?”
Among the dividend stocks Cramer recommends are AT&T, Verizon Communications, Consolidated Edison and Kinder Morgan Energy Partners.
Others are bullish on dividend stocks too. A recent Morgan Stanley report suggests the following companies:
• Altria
• AT&T
• Lorillard
• Pinnacle West Capital
• Philip Morris
• Bristol Myers-Squibb
• Microchip Technology
• Pfizer
• Merck
• Entergy
• CMS Energy
• Kraft Foods
• DuPont
• ConocoPhillips
• Heinz
• Genuine Parts
• ConAgra
• Chevron
• Abbott Labs
• Johnson & Johnson.
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