For most people fortunate enough to be born in the United States, or any other industrialized country, they have access to the two main ingredients to achieve financial success: 1. Opportunity and 2. Time. Unfortunately, very few people are able to take advantage of the situation enough to even build a secure retirement. Here are some of the reasons people fail, and what you can do to not fall into that group:
Understand The GoalThere are two main subsets of the population that have never given serious consideration to their financial future. The first group includes the altruistic dreamers that are trying to build a better world for society, and the second group is their counterpart, those consumed with living for today.
If financial success was never your goal, the inability to achieve it is technically not a failure. However, there are certain innate outcomes that are so universal that they don't have to be explicitly listed as goals; and I would put the financial wherewithal to meet your family's needs in retirement as an innate goal.
Define a Plan to Accomplish the GoalThis is actually the most difficult step. One could easily infer that everything a person needs to know to succeed financially is out there freely available. This is true, but it is also true that there is a lot of misinformation that is freely available.
An individual must sort through what is good and what is bad information. If you don't have someone you trust to help you define your plan, it could involve some lessons from the school of hard knocks. The good news is that these lessons are rarely fatal, but create lasting experiences.
Use Time to Your AdvantageTime is your most valuable wealth building asset. Everyone is born with it. Few realize its importance until they lose most of it. The asset is so valuable it can’t be bought. As a value/dividend investor, I have learned that time can cure many mistakes and provide enormous investment leverage.
When you are young time is your fiend. It allows to recover from mistakes. It educates you and provides you with valuable experience. However, time is a double-edged sword that can also work against you. When you are young it is easy to say, "I will start investing tomorrow - I have plenty of time." Time can also create a false sense of urgency - "I held this stock for over a year and its price has gone nowhere." Use time to your advantage - start young and be patient.
Dividend Growth Stocks For Building WealthThere are many valid ways to successfully build long-term wealth. Some involve more risk than others. Being relatively conservative, I have chosen Dividend Growth Stocks as a significant part of my financial plan. This is not a new strategy. Many of today's dividend growth stocks have provided investors financial security for decades. Here are a few of them, including their yield, dividend growth rate, years of consecutive dividend growth and the first year a dividend was paid:
Diebold, Inc. (NYSE:DBD)| Yield: 3.0%
Div. Growth: 3.3% | Yrs of Growth: 58 | Since: 1954
Diebold, Inc. develops, makes, and services self-service transaction systems, electronic & physical security systems, and software used to equip bank facilities, voting terminals.
Emerson Electric Co. (NYSE:EMR) | Yield: 2.3%
Div. Growth: 2.2% | Yrs of Growth: 55 | Since: 1947
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world.
Genuine Parts Company (NYSE:GPC) | Yield: 3.4%
Div. Growth: 4.8% | Yrs of Growth: 55 | Since: 1948
Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products.
Procter & Gamble (NYSE:PG) | Yield: 3.0%
Div. Growth: 7.0% | Yrs of Growth: 54 | Since: 1891
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.
3M Company (NYSE:MMM) | Yield: 2.3%
Div. Growth: 3.3% | Yrs of Growth: 53 | Since: 1916
3M Co. provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.
Coca-Cola Company (NYSE:KO) | Yield: 2.8%
Div. Growth: 6.8% | Yrs of Growth: 49 | Since: 1893
The Coca-Cola Company is the world's largest soft drink company with a sizable fruit juice business.
Lowe's Companies, Inc. (NYSE:LOW) | Yield: 1.6%
Div. Growth: 15.0% | Yrs of Growth: 48 | Since: 1961
Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.
Colgate-Palmolive (NYSE:CL) | Yield: 2.5%
Div. Growth: 12.5% | Yrs of Growth: 47 | Since: 1895
Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories.
Hormel Foods Corp. (NYSE:HRL) | Yield: 1.8%
Div. Growth: 10.6% | Yrs of Growth: 45 | Since: 1928
Hormel Foods Corp. company is a leading processor of branded, convenience meat products (primarily pork) for the consumer market.
CenturyLink, Inc. (NYSE:CTL) | Yield: 7.3%
Div. Growth: 3.6% | Yrs of Growth: 37 | Since: 1974
CenturyLink, Inc. provides voice service to 6.5 million customers and Internet service to 2.4 million customers in rural towns as well as larger cities such as Las Vegas.
Walgreen Co. (WAG) | Yield: 1.6%
Div. Growth: 18.5% | Yrs of Growth: 36 | Since: 1933
Walgreen Co is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.
McDonald's Corporation (NYSE:MCD) | Yield: 3.2%
Div. Growth: 15.0% | Yrs of Growth: 35 | Since: 1976
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,500 restaurants in 117 countries.
Obviously, no one can definitively say what any stock’s future will bring. At one time companies such as General Electric (NYSE:GE) and Bank of America (BAC) had long strings of consecutive dividend increases. In building a long-term portfolio, it is important to follow a sound asset allocation model and continue to monitor your investments.
Full Disclosure: Long EMR, GPC, PG, MMM, KO, CL, CTL, MCD. See a list of all my income holdings here.
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