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NEW YORK (
) -- "While Europe promises that we'll live happily ever after, I'm going to get paid to wait," Jim Cramer told his
TV show viewers Tuesday, after a lackluster day on Wall Street.
Cramer said the markets gave three examples today of how it rewards shareholders who hold onto stocks, as opposed to only renting them.
Cramer said that
all proved today how owned a good-yielding dividend stock can make all the difference, even on a ho-hum day in the markets.
Every quarter GE pays 15 cents a share to its shareholders, said Cramer, while Lilly pays 49 cents a share and 3M, 55 cents a share. While that might not seem like a lot, over time it added up, not to mention the positive tax treatment of dividend income.
And then there's positive news. In the case of 3M, Cramer said the company reaffirmed guidance today and was one of the leaders in the Dow. The company also has a 34-year-track record on consecutive dividend payments.
In the case of Eli Lilly, shares of the company jumping in today's trading on news that the company's latest Alzheimer's drug could cause a 50% to 100% boost in the Lilly's earnings by 2020. Investors now wait for the latest clinical trial data.
Finally, there was positive news out of General Electric, which said that its subsidiary, GE Capital, is preparing to start offering up more of its earnings to GE, its parent.
Cramer said these are just three examples of great companies with great dividends that pay investors to wait today while still offering great growth prospects for the future.
Big Merger Plans
In the "Executive Decision" segment, Cramer sat down with John Faraci, chairman and CEO of
, which is putting the finishes touches on its planned acquisition of
Faraci said that while International Paper hasn't received regulatory approval yet for the Temple-Inland deal, the company has a full-time staff working on their merger plans and things are off to a great start. He said that 85% of Temple's business is corrugated container board, a core business that IP knows very well. The merger will be all about taking costs out of the equation, said Faraci, something that can only be done by a combined company.
Faraci explained that IP's strategy has been that fewer, bigger and better facilities are the way to make money going forward, which is why the company has only been investing in its best facilities. He said the company has been making money with this strategy, even though the markets have only recovered about half of the 12% it lost during the recession. "There's still lots of room to grow," said Faraci.
Outside of the U.S., Faraci said IP is also growing, having recently completed another acquisition in India. He said in Brazil, Russia and China, International Paper is also seeing growth as the company "has a lot of ways to win."
Here at home, Faraci was optimistic about the holiday shopping season, noted that retailers seem to be off to a strong start for the season.
Cramer called International Paper a winner and continued his recommendation of the stock.
Speculative Oil and Gas Play
In his "Tweet Like Mad" segment, Cramer responded to three tweets asking about
Carrizo Oil & Gas
, the small oil and natural gas producer that's fallen 51% since Cramer last spoke with the company's CEO on July 12.
Cramer said that shares of Carrizo have been hard hit since the summer as a result in part to falling oil and natural gas prices and also by production problems in the company's Eagleford shale assets. He explained that several wells in that area have not been completed on time, something that's been spooking investors.
Additionally, Carrizo has an overspending problem, said Cramer, as the company plans to spend $200 million more than it will earn next year to find even more oil and gas.
With all of that said, Cramer noted that Carrizo now trades at just 19 times earnings with a 28% long-term growth rate. The company is also keeping to its promise of 50% production growth, which according to Cramer, is the only metric that matters.
Cramer likened Carrizo to a small version of
. Carrizo is also looking for additional joint venture partners and could be an intriguing takeover prospect, especially for foreign oil and gas companies.
Cramer said for investors looking to take a chance on a small oil and gas company, Carrizo is a terrific buy, especially at these depressed levels.
In the "Off The Charts" segment, Cramer went head to head with colleague Mark Sebastin over the health of the overall markets using the chart of
CBOE Volatility Index
, more commonly known as the VIX. Cramer explained that the VIX measures investor sentiment, complacency vs. fear.
Looking at a 12-month chart of the VIX, Sebastin noted six distinct periods of market action. The first, a period of low volatility, around 17%, ended in April. The second, slightly higher, 22%, ended in June. By July and August, the VIX got very choppy, a warning sign of bad things to come. By the end of August, the VIX spiked to 40% and was extremely volatile. This was followed by a calming period from mid-October through Novemeber, with a final, even calmer period over the past few days.
According to Sebastin, the markets are once again reaching equilibrium, forming a viable bottom. Using a second chart comparing the VIX vs. the
, Sebastin noted that from late October through the present, the VIX and the S&P have been acting independently of each other, another bullish sign for the markets.
Cramer said this analysis is compelling, and shows that the markets may indeed be poised for another move higher in the short term.
Cramer was bullish on
He was bearish on
Royal Bank of Canada
In his "No Huddle Offense" segment, Cramer once again opined on the ineffectiveness of stock buyback programs. He said these programs are a terrible waste of money and are often used to help executives boost earnings per share just enough to receive their bonuses. Cramer said he prefers dividends, which actually reward those who own the stock, rather than management.
There are exceptions however, such as
, which has a massive and well-timed buyback program. AutoZone has reduced its share count from 63 million shares to just 42 million in a little over three years. Another example of buybacks done right,
, which has reduced its share count from 93 million shares to just 68 million, a 26% reduction.
In both cases, Cramer said management is astute about buying shares at the right time, maximizing shareholder value. Better still, both companies have great businesses.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long any stock mentioned.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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