"Never spend the principal, only the dividends."
Years ago, my mother spoke these crucial words to me, but of course, as a young boy I failed to grasp the true meaning behind this concept. The concept, which is now deeply ingrained in my financial philosophies, is actually quite simple: Investing should never be synonymous with gambling.
A stock that pays no dividend will only reward you if its price appreciates. This, of course, is pure speculation -- a gamble on whether or not the company's ticker symbol will end in the green or red. Stocks with a long record of providing dividends, however, provide you with a slight assurance of a potential source of income.
This simple philosophy, combined with abundant historical evidence, is the sole reason why I will never invest in stocks that don't pay dividends.
That said, however, it is easy for investors to fall into a trap, lured by ultra-high dividend yields. More often than not, stocks with sky-high yields are likely "too good to be true" -- a seemingly "cheap" price tag combined with an alluringly high income stream.
But once you dig down deeper, the stock has probably earned its low price tag, meaning there is likely a good fundamental reason the market has valued the company so low. It's like the faulty product you see on a clearance rack that retailers try to push off on uninformed customers. And as you know from ABC's Shark Tank, I'm a shrewd and frugal business man -- I've always been this way -- even deals that seem like steals won't stop me from sniffing out a lemon.
In fact, that's exactly what the O'Shares' lineup of exchange traded funds aim to do -- sniff out the lemons, avoid the traps, and invest in stocks that show decades, if not a lifetime, of fruitfulness.
Our first listed fund -- the FTSE US Quality Dividend ETF (NYSE: OUSA) -- applies a disciplined and methodological approach to dividend investing. We focus on three key factors: high quality, low volatility, and dividend yield. These combined factors result in a well-diversified portfolio, with 20% less volatility than the broader market since July 14th 2015, and stocks with high quality balance sheets.
Soon enough, more ETFs from the O'Shares pipeline will join OUSA -- rounding out what we think will create an ideal portfolio.
I've always said that I'm the only Shark who tells the truth, despite any of the uncomfortable situations that may arise from doing so. I put my money where my mouth is, in the case of the O'Shares offerings, I am literally doing so. As we roll out these offerings, which will seek to cover the best dividend paying stocks across the US, Asia Pacific, and European markets.
Join me, Kevin O'Leary, on August 26th, 2015 at 11:00AM ET for an exclusive webinar with ETFdb.com and Dividend.com. We'll discuss my favorite thing, MONEY -- and how you can make more it through smart investing!
Disclosures:
Before you invest in O'Shares Investments℠ funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal.
There are risks involved with investing, including possible loss of principal. Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The funds may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. The funds' emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities. Returns on investments in foreign securities could be more volatile than, or trail the returns on, investments in U.S. securities. Exposures to foreign securities entail special risks, including political, diplomatic, economic, foreign market and trading risks. In addition, unless perfectly hedged, the Fund's investments in securities denominated in other currencies could decline due to changes in local currency relative to the value of the U.S. dollar, which may affect the Fund's returns. The funds' hedging strategies may not be successful, and even if they are successful, the funds' exposure to foreign currency fluctuations is not expected to be fully hedged at all times. See the prospectus for specific risks regarding the Fund.
Past performance does not guarantee future results. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns.
O'Shares Investments℠ funds are distributed by Foreside Fund Services, LLC. Foreside Fund Services, LLC is not affiliated with O'Shares Investments℠, O'Leary Funds Management LP, or any of its affiliates.