Cramer's 'Mad Money' Recap: Preparing for the Selloff (Final)

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NEW YORK (TheStreet) -- "If health care reforms pass this weekend, this market's going to catch a cold," Jim Cramer told the viewers of his "Mad Money" TV show Thursday.

He said investors need to immunize their portfolios with good, high-paying dividend stocks, if they expect to survive the coming selloff.

Cramer said there's now little doubt that 2011 will be the year of higher taxes on capital gains and dividends if Obama's legislation passes. That means at some point this year, investors will be selling stocks to lock in lower tax rates.

"Investors need to be worried," Cramer said, as he outlined a portfolio of five stocks that should afford some protection from what he believes could be a sizable decline.

First, Cramer recommended an oil stock like BP (BP), a stock which he owns for his charitable trust, Action Alerts PLUS. BP yields 5.8%, said Cramer, and is cutting costs while still providing growth.

Cramer also recommended a recovery stock, like DuPont (DD), which yields 4.4%, and an energy trust, like Kinder Morgan Energy Partners (KMP), which yields 6.5%.

Cramer advised adding a utility like Verizon (VZ), with its 6.3% dividend, and finally a drug company like Eli Lilly (LLY), which yields 5.4%.

Cramer said this portfolio averages 5.7%, a nice protection against higher taxes. For those looking for even greater yield, Cramer said investors could swap DuPont for Altria (MO), another Action Alerts Plus name, which would raise the portfolio's average yield to 6.2%.