As we start a new year, this is the time that many people make their resolutions. In addition to the timeless resolutions of losing weight, quitting smoking, start exercising, et al, some people are resolving to get their finances in order in case the economy turns downward in 2012. Here is one more resolution may want to consider...
If you suddenly found yourself unemployed and were unable to immediately replace the lost income, what would you do? I suspect there are few families that have given a lot of thought to this. It is like buying a cemetery plot — it is not high on the list to things to consider. The drive home after receiving a pink slip is too late to start planning; at this point you should be in a position to start executing your plan.
In this economy finding a similar well-paying job could take much longer than the severance your previous employer paid. One of the best ways to ensure financial success between jobs is to develop alternative income steams. This is not something you can quickly do the day you are terminated.
One of the best alternative income sources are dividend growth stocks. Just like a regular job they can provide you a steady and growing income. With advance planning, your income portfolio can become the foundation of your contingency plan. Below are diverse group of blue-chip dividend growth stocks yielding more than 3% to consider when building your rainy day income portfolio:
Abbott Laboratories (NYSE:ABT) | Yield: 3.4%
ABT is a diversified life science company that is a leading maker of drugs, nutritional products, diabetes monitoring devices and diagnostics. In mid-October 2011, Abbott announced plans to split the company. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 39 consecutive years.
Emerson Electric Co. (NYSE:EMR) | Yield: 3.5%
EMR designs and supplies product technology and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 56 consecutive years.
Intel Corporation (NASDAQ:INTC) | Yield: 3.5%
INTC is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. The company has paid a cash dividend to shareholders every year since 1992 and has increased its dividend payments for 8 consecutive years.
Johnson & Johnson (NYSE:JNJ) | Yield: 3.5%
JNJ is a leader in the pharmaceutical, medical device and consumer products industries. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 49 consecutive years.
Procter & Gamble (NYSE:PG) | Yield: 3.2%
PG is a leading consumer products company the markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 55 consecutive years.
AT&T Inc. (NYSE:T) | Yield: 5.9%
T (formerly SBC Communications) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 28 consecutive years.
Even if you never lose your job, one day you will retire and will face a very similar situation. Your salary will go away, replaced by much smaller Social Security payment, and possibly a pension payment (for a shrinking group of employees). More and more retirees have to manage their nest egg to ensure you don't run out of money. A good plan, the ability to execute and multiple revenue streams including blue-chip dividend growth stocks will make the transition much easier.
Full Disclosure: Long ABT, EMR, INTC, JNJ, PG, T. See a list of all my dividend growth holdings here.
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