"The problem with Socialism is that eventually you run out of other people's money."
- Margaret Thatcher
If you have followed the U.S. Social Security saga over the last several years, you know it is projected to run out of money soon. As it turns out "soon" just may be much sooner than previously expected. To make matters worse, it has been "broke" for some time, but through creative accounting that would land a private-sector CFO in jail, the government has been able to keep the appearance of solvency.
Bill Fleckenstein in a recent MSN Money article, discussed several issues facing Social Security. Here are some of the key points from his article:
Do you really want to bet your retirement on a system like this? I certainly won't. When planning for retirement, my underlying assumption is that Social Security will go broke before I ever receive a dime. Like everyone, I will need an income during my retirement years. I am currently planting the seeds for that income with high-quality dividend stocks that have a long track record of increasing their dividends each year. Below are some blue chip dividend stocks that eventually end up in most income investors' portfolio:
Wal-Mart Stores, Inc. (WMT) - Yield: 2.11% - Analysis
As for Social Security running out of money, I think people will be paid what was promised since the government can print all the money it needs. However, what was promised may not be enough after inflation, particularly if a lot of money is printed.
The largest retailer in North America knows how to treat customers and shareholders. WMT has rewarded investors with 35 years of consecutive dividend increases.
Abbott Laboratories (ABT) - Yield: 2.11% - Analysis
This drug manufacturer knows the best medicine for a sick portfolio is increased dividends. ABT has been dispensing higher dividends for 37 consecutive years.
Johnson & Johnson (JNJ) - Yield: 3.23% - Analysis
For 47 consecutive years this manufacturer of health care has delighted investors with increased dividends.
Procter & Gamble Co. (PG) - Yield: 3.14% - Analysis
This provider of branded consumer goods products and Dividend Aristocrat has made investors smile for 53 consecutive years with increased dividends.
Full Disclosure: Long ABT, JNJ, PG, WMT. See a list of all my income holdings here.
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