Cramer: A New Way to Generate Yield

CNBC

Jim Cramer believes dividend yielding stocks are an important part of any portfolio if only because reinvested dividends can generate substantial gains. (Read More Below the Video.)

However in the current market he thinks they play a substantially more important role. With the Fed holding rates at or close to 0%, time-honored saving instruments such as money market accounts or CD's just don't pay enough interest.

Therefore Cramer says, "everyone should own at least one high-yielder , and those of you who are nearing or in retirement should own many more."

And on Wednesday's Mad Money, Cramer said in his search for new ways to generate yield, he found Aviv REIT .

Cramer thinks the yield could be substantial.

Aviv came public in March , "so we don't yet know how big Aviv's payout will be, but it's a real estate investment trust, so they have to return most of their profits to shareholders, and many estimates suggest that the stock could yield around 5% at these levels," he said.

In addition, Cramer noted he also likes Aviv because it's a play on a theme that he believes will be investable for quite some time - the aging baby-bommer population.

"Aviv owns 258 skilled nursing facilities across the country who attend to patients recovering from an illness or surgery, or who may have been discharged from a hospital, but they still need rehabilitation or restorative care. And they also cater to long-term residents who need daily assistance," Cramer said.

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Cramer thinks demand for their services will do nothing but grow as boomers get older and older.

It seems others on Wall Street share Cramer's enthusiasm. Since Aviv began trading in March shares have rallied over 40%.

Although Cramer never advocates chasing gains, he is a fan of the stock for the reasons outlined above. In circumstances such as these, the Mad Money host recommends watching for a pullback, picking an entry point and then pulling the trigger strategically. "I don't think this one is done going higher," Cramer said.


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