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For investors looking for protection from a chaotic market environment, Cramer on Wednesday outlined his top high-yielding stocks.

Windstream[WIN  11.86    0.07  (+0.59%)   ]: This rural telco provider’s stock sports an 8.5 percent dividend yield. While Windstream’s wire-line phone business is in decline, the company has been focusing on areas of growth, such as broadband and business services. Of Cramer’s top high-yielding stocks, he said Windstream’s dividend is the least safe, even though it has enough free cash flow to cover the payout. For investors looking for a safer play, though, he suggests Verizon[VZ  37.39    0.50  (+1.36%)   ].

Solar Capital[SLRC  23.41    1.07  (+4.79%)   ]: This specialty lender’s stock pays a massive 10.7 percent dividend yield. Cramer would typically view a yield that high as a red flag, but this is a special case. As a business development company, Solar Capital lends money to small- and medium-sized companies that are too tiny or risky for most people to invest in. Solar Capital then returns 90 percent of its profits to shareholders by way of a huge dividend, Cramer explained. He likes the stock at current levels.

Energy Transfer Partners[ETP  43.3999    0.5299  (+1.24%)   ]: This pipeline master limited partnership yields 8.3 percent. Cramer thinks of this company as a “steady toll operator for moving oil and gas around.” Thanks to recent oil and gas discoveries, demand for new pipe has skyrocketed, benefitting ETP. Some investors are upset that the company did a massive stock offering that knocked its stock price down, but Cramer sees it as an opportunity to get shares at discount.

American Electric Power[AEP  38.83    0.40  (+1.04%)   ]: This utility company is committed to paying out higher dividends, Cramer said, and the stock already has a 4.9 percent dividend yield. American Electric Power is one of the U.S.’s top generators of electricity and has the country’s largest transmission system. Cramer prefers this utility to others, though, because he thinks its utility portfolio is among the strongest in the country and it provides power to the “Heartland” where manufacturing is “very strong.”

Sanofi[SNY  33.49    0.63  (+1.92%)   ]: This drug company pays a 5.4 percent dividend yield. Cramer likes Sanofi because it’s a defensive play that doesn’t need a growing economy for business to be good. In addition, it has the lowest exposure to Medicare of any big pharma company. So any potential cuts U.S. lawmakers make to the program are less of a concern. Meanwhile, the company is moving into faster growing areas, such as vaccines, diabetes, generics and more.

Read on for Cramer’s Top Dividend Stocks 2011

 

 

When this story was published, Cramer’s charitable trust owned Sanofi.

“Dividends put money right in your pocket,” he said. “Buybacks are supposed to help support the share price, but when you look at the actual results, the idea that most buybacks return anything to shareholders has begun to seem nothing short of fanciful.”

To prove his point, the “Mad Money” host took a look at the companies he calls the most egregious users of buybacks—Cisco[CSCO  16.09  ---  UNCH  (0)   ], Wal-Mart Stores[WMT  51.39    -0.43  (-0.83%)   ]and Exxon Mobile[XOM  71.27    -0.57  (-0.79%)   ].

Over the last five full fiscal years, Cisco spent $36.4 billion buying back stock, yet its share price still dropped by 10.7 percent. If the company had returned that money to shareholders in the form of a dividend, Cramer said, it would amount to $5.97 a share in dividends over that time period. Assuming the stock’s performance was the same, and not a 10 percent loss, you would have had a 22.3 percent gain.

Wal-Mart spent $35 billion buying back stocks, which Cramer said would have translated into $8.33 a share in dividends. The retailer is up 15 percent over the last five fiscal years, or 27 percent including the company’s current dividend program. Assuming Wal-Mart shares delivered the same performance instead of a 27 percent gain, shareholders would have seen a 33 percent return if the buyback money went to dividends.

And finally, Exxon Mobile spent $130 billion on buybacks during the five year period, which is enough money to have covered $21.31 per share in dividends. The company gave shareholders a 45 percent return, including dividends, during that period. But if it had not bought back stock and instead boosted the dividend, assuming the stock went up the same amount, shareholders should have gotten a 68 percent gain.

Cramer also likes that dividend yields get bigger as a stock goes down. But when a company buys back stock and the share prices go down, he said, there is no benefit.

What’s more, short-sellers hate to bet against stocks with dividends because when they borrow shares in order to short them, they have to cover the dividend payments as well.

“All a buyback really seems to do [is] give management the ability to shrink the share-count in order to produce, I think, artificial earnings beats,” Cramer said. “Shame on those who keep buying back their stock in light of these very telling numbers.”

http://www.cnbc.com/id/44488056

Many technicians are calling for a continued decline. Ed Ponsi of Barchetta Capital Management, however, takes a much less negative view. Why? Watch the video to find out.