Cramer's 'Mad Money' Recap: Stick With High-Yielding Stocks
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"Cash is no longer king," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.
With every Federal Reserve interest rate cut, cash becomes a less and less attractive place to invest in, Cramer said. "You'd be insane to keep your money in CDs or savings accounts at these rates."The new "king" of investments, according to Cramer, is high dividend-yielding stocks.
A Stock With a Big DividendCramer highlighted US Energy Trusts as a second high dividend-yielding investment idea. Energy trusts, he pointed out, do not receive a lot of attention on Wall Street, but they pay out huge dividends, mainly because they don't pay taxes on their earnings. Cramer's short list of energy trusts included Permian Basin Royalty Trust (PBT), BP Prudhoe Bay (BPT), San Juan Basin (SJT) and Hugoton Royalty Trust (HGT). Of the four, Cramer ranks Permian Basin Trust as the best. Cramer said he favored Permian Basin for several reasons. First he pointed out that the trust is diversified, with 59% of its operation in oil and the other 31% in natural gas. Second, Permian Basin operates mainly in Texas, a friendly place to drill for oil and gas. Finally, Cramer said Permian Basin has nine years of reserves left in the trust. "This makes (it) a safe place to invest for at least the next three to four years." Cramer said Permian Basin is also predictable. Even if oil prices go lower, he predicts the trust's dividend will still be "impressive." Permian Basin currently yields just over 12%.
An Outrageous Pay PackageCramer expressed outrage at Washington Mutual's (WM) Chairman and CEO Kerry Killinger and 100 other executives who were given attractive compensation targets by the company's board of directors. According to the Wall Street Journal, the board voted to shield the compensation targets from some costs from mortgage losses and foreclosures when bonuses are calculated later this year. Cramer was disgusted with the action because it comes at a time when the company teeters on the brink of insolvency. Cramer called the board's actions "shameful" and added the entire board to his "Wall of Shame." "How can you people live with yourselves," he asked, while noting that the proposed bonuses for Killinger will range between 365% and 548% of the CEO's base salary for the year. Cramer urged Washington Mutual shareholders to hold the company's board accountable for their actions.
Mad MailIn this segment, Cramer told a viewer that he wouldn't recommend buying Seagate (STX), saying he's not a fan of any technology stock.
Am I Diversified?Cramer played "Am I Diversified?" with callers to find out if their portfolios are right for this market.
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