How Kevin O'Leary Makes Money With Dividend Stocks

There's one word that I think you should always associate with Kevin O'Leary: Dividends. Besides his famous run on television's Shark Tank, he runs his own mutual fund company called O'Leary Funds. And its ETF products are appropriately referred to as O'Shares. What do these ETF products have in common? Dividends. Take OUSA, for instance. This is the O’Shares U.S. Quality Dividend ETF.

If you ever watch this show, you'll notice that Kevin O'Leary will almost always seek out a unique structure to his deals where he asks for a royalty in perpetuity. Instead of just fronting cash for an equity stake, he'll try to get that equity stake and get a royalty in perpetuity.

Mr. Wonderful likes to structure his deals this way because wants to make sure that he starts collecting a return on his cash immediately, regardless of what eventually happens to the equity.

He made a deal where he would get $1 for every cupcake sold until he got his money back (which he did within 74 days) and then 45 cents on every cupcake sold in perpetuity. Every time someone buys a cupcake, Mr. Wonderful collects what amounts to a very sweet dividend. More cupcakes? More royalties.

Let's say you invest in Procter & Gamble Co. - stock ticker PG. This is a global consumer products company that has 22 different $1 billion brands - including the likes of Bounty and Tide. If you own stock in Procter & Gamble, you capture a tiny portion of the profit they earn every single time someone buys, say, Tide laundry detergent. The more detergent they sell, the more profit there is for you to capture. And you eventually capture that profit portion through the growing dividend Procter & Gamble pays its shareholders - a dividend that's been growing for 64 consecutive years! Talk about dividend growth investing!

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Disclaimer: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose ...

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