The new narratives that sent tech tumbling

Cramer also sounded the alarm on dividend stocks — securities with high yields that investors often flock to when they fear a slowdown.

“This strategy of hiding in dividend stocks only works if you’re confident that the dividend itself is safe, that it won’t be cut by management in the not too distant future,” he said. “Even if you only have a mild suspicion that the payout might be in jeopardy, … it’s not worth the risk.”

The stock of CenturyLink, which has an 11.7 percent yield — the largest in the S&P 500 — is one such name that’s not worth the risk, Cramer said.

The company, an old-school telephone and data service provider, “kind of feels like a dinosaur” in the new age of communications, the “Mad Money” host said, adding that he was concerned about its declining revenues.

“I can’t recommend CenturyLink … for a number of reasons,” he said. “The main one is I don’t have enough faith in the dividend. Anytime you see a stock with a double-digit yield, that’s an enormous red flag, people. It says many investors simply don’t believe the company will be able to maintain its payout, and here’s one where I’ve got to go with the crowd.”

Be the first to comment

Leave a Reply

Your email address will not be published.


*