The Value of Dividend Stocks

Entrepreneur, investment guru, and television personality Kevin O’Leary says the choppy financial markets in North America shouldn’t cause investors to run away. Instead, he says, stock investors should be looking at these times with opportunities in mind. In an interview with CTV News, O’Leary says he only invests in dividend-paying stocks. He explained that over the last four decades, 71% of the market’s returns came from dividends. He has managed to follow three simple rules that he claims have saved him as an investor. These rules are as follows:

1. Never put more than five percent of a portfolio into any one investment. Stocks and bonds can both lose a lot of value during unpredictable situations.
2. Never put more than twenty percent of a portfolio into one sector of the economy. Investments are often categorized into sectors so that similar companies can be compared relative to each other.
3. Never own a stock that doesn’t pay a dividend. Once a publicly traded company becomes profitable it can choose to reward its shareholders with cash from after-tax earnings.

Source: Modest Money

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