Have A Plan
If you suddenly found yourself unemployed and were unable to immediately replace the lost income, do you know what you would 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.Prepare to Execute Your Plan
Schools and businesses have fire drills for a reason. We all know we need to get out of a burning building, but do we really know how until we practice. Recently, my employer had a fire drill and too many people were going down the stairs on one side of the building and this created a traffic jam. If it had been a real fire many would have lost their lives.In the same regard, it would make sense to take your plan and play "what if I lost my job today. " You need to understand the answers to these questions: How long can I go without finding a replacement job? Will my plan permanently damage my financial position? What adverse effect will this have on my family (kids' college, braces, house payments, etc.)? What is the worse case scenario? How will we fare in the worse case scenario?
Develop Alternative Income Streams
One of the best ways to ensure financial success is to develop alternative income steams. If one stream dries up, you have others to fall back on. We all have things we are good at, most can be packaged in a way to provide alternative income. Again, this is not something you can quickly develop the day you are terminated.Dividend Growth Stocks
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. Here are several dividend stalwarts to consider when building your income portfolio:General Dynamics (GD) is the world's fifth largest military contractor and also one of the world's biggest makers of corporate jets. The company has paid dividends since 1979 and has increased them the last 19 years. Current yield: 2.61%
Colgate-Palmolive Company (CL) is a consumer products company, whose products are marketed throughout the world. Colgate’s Oral Care products include toothpaste, toothbrushes, oral rinses, dental floss and pharmaceutical products. The company has paid dividends since 1895 and has increased them the last 47 years. Current yield: 2.64%
Medtronic Inc. (MDT) is a global medical device manufacturer has leadership positions in the pacemaker, defibrillator, orthopedic, diabetes management and other medical markets. The company has paid dividends since 1977 and has increased them the last 33 years. Current yield: 2.68%
The Coca-Cola Company (KO) is the world's largest soft drink company. It engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates, fruit juices and syrups worldwide. The company has paid dividends since 1893 and has increased them the last 48 years. Current yield: 3.01%
McDonald's Corporation (MCD) is the largest fast-food restaurant company in the world, with about 32,500 restaurants in 117 countries. The company has paid dividends since 1976 and has increased them the last 34 years. Current yield: 3.03%
The Procter & Gamble Company (PG) is a leading consumer products company markets household and personal care products in more than 180 countries. The company has paid dividends since 1891 and has increased them the last 54 years. Current yield: 3.21%
Abbott Laboratories (ABT) is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics. The company has paid dividends since 1926 and has increased them the last 38 years. Current yield: 3.29%
The Clorox Company (CLX) is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products. The company has paid dividends since 1968 and has increased them the last 35 years. Current yield: 3.30%
Johnson & Johnson (JNJ) engages in the manufacture and sale of various products in the health care field worldwide. The company has paid dividends since 1944 and has increased them the last 48 years. Current yield: 3.41%
Sysco Corporation (SYY), through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada. The company has paid dividends since 1970 and has increased them the last 39 years. Current yield: 3.44%
Harleysville Group Inc. (HGIC) is a regional holding company for property and casualty insurance companies that operates in 32 states, primarily in the eastern half of the U.S. The company has paid dividends since 1986 and has increased them the last 24 years. Current yield: 4.12%
AT&T Inc. (T) provides telephone and broadband service, and the company holds full ownership of AT&T Mobility (formerly Cingular Wireless). AT&T Corp. was acquired in late 2005 and BellSouth in late 2006. The company has paid dividends since 1984 and has increased them the last 27 years. Current yield: 5.87%
The Bottom Line
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 GD, CL, MDT, KO, MCD, PG, ABT, CLX, JNJ, SYY, HGIC, T. See a list of all my income holdings here.
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