Cramer Prefers GIS, PFE, T, MO, WM, MMM, KO, EMR, NUE For Dividends

According to Cramer, investing in bonds and certificates of deposit (COD), although low risk, will be an extremely bad decision, especially at a time when interest rates are at record lows. Jim prefers buying any of the following stocks to generate a good dividend income:

General Mills (NYSE: GIS): The company has recently raised its per share dividend to $0.49 from $0.47 for the second time in 2009, indicating strength in GIS. Although GIS’ dividend yield of 2.8% may not seem impressive, steadily increasing payouts do look attractive.

Pfizer (NYSE: PFE): Before PFE purchased Wyeth, Cramer was never impressed by the company enough to recommend it. However, he became PFE’s fan after the company disclosed that the deal helped save $4 billion in costs and enhanced its pipeline and product portfolio. With the recent hike in dividends from $0.16 to $0.18 a share, PFE’s yield now stands at 3.8%. Cramer also expects PFE to return a massive $46 billion to shareholders over the next five years.

AT&T (NYSE: T): Cramer says that T is a big, safe telecommunication company that has high exposure to the rapid adoption of smartphones. T has recently raised its dividend to $0.42, which has raised its yield to 6.1%.

Altria (NYSE: MO): When MO spun off Kraft Foods and Philip Morris International, Cramer labeled it as a “steady domestic tobacco company.” MO currently has a dividend yield of 6.8% and has returned up to 504% to shareholders over the past 20 years, if the investors have reinvested the dividends in the company. The point is that this return has been delivered even when the S&P 500 index has lost 25%.

Waste Management (NYSE: WM): WM has strong market share of the waste removal/disposal and landfill facilities. As a result, WM has pricing power, which has come in handy during the recession. WM hiked its dividend on December 17, 2009, by 8.6%, increasing the yield to 3.8%.

3M (NYSE: MMM): According to Cramer, MMM is the “perfect proxy for any rebound in the market,”as it manufacturers diverse products, ranging from Post-It notes to glass computer screens, health-care products and scotch tape. Although MMM has a dividend yield of only 2.5%, it has been consistently raising it for more than half a century, the last hike being in February 2009. Cramer believes that another dividend hike is the offing.

Emerson Electric (NYSE: EMR): EMR has an yield of 3.1%, following the increase in November 2009 for the 53rd consecutive year. Shareholders who have reinvested their payouts over the past decade have earned 89%, as compared to the 25% decline in the S&P 500. Cramer expects the company to announce the next dividend hike by early February 2010. Cramer also likes EMR for its global exposure.

Nucor (NYSE: NUE): Under the leadership of CEO Dan DiMicco, NUE has hiked its annual dividend to $1.44 per share, raising the yield to 3.2%. This is despite the absence of the US stimulus spending on infrastructure and continued steel dumping from China. Cramer expects NUE to restore its special dividend this year, which is likely to boost its payout.

Coca-Cola (NYSE: KO): Although KO has an yield of just 2.9%, the company has been raising its dividends for 47 consecutive years. Cramer expects KO to hike its dividend again when it declares its next payout in early 2010.