‘I would never put my money in a bank stock again’: Kevin O’Leary says US government has ‘nationalized’ US banking system. Here’s what he likes instead

The failures of Silicon Valley Bank and Signature Bank have spooked depositors and investors. While regulators were quick to step in to ensure deposits were safe, Shark Tank star Kevin O’Leary wasn’t impressed.

“What actually happened over the weekend is that he nationalized the American banking system,” he told CNN, referring to US President Joe Biden. “It’s no longer a risk. It is no longer private in any way. It is now backed by the government, ultimately by the taxpayer.”

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According to O’Leary, this should change how investors view the sector.

“What really happens when the president walks out in a few moments is basically he’s like, ‘Look, I can’t take this risk anymore, I’m just going to nationalize the whole thing,'” O’Leary said, adding Da As banks become more regulated and concentrated, they would be “far less profitable.”

And that doesn’t bode well for shareholders.

“There’s no such thing as a free lunch, and that’s going to be very expensive for banks’ shareholders in the long run. I would never put my money in a bank stock again.”

So where does Mr. Wonderful put his money?

Dividend Stocks

O’Leary believes in investing in dividend stocks.

“When I started doing some research, I found an interesting fact that changed my investing philosophy forever,” he said in a Forbes interview. “Over the past 40 years, 71% of market returns have come from dividends, not capital appreciation.”

“So rule one for me is I’ll never own anything that doesn’t pay a dividend. Always.”

If you share the same view, here are the top two holdings from O’Leary’s flagship ETF — ALPS O’Shares US Quality Dividend ETF (OUSA).

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Microsoft

Tech stocks aren’t known for their dividends, but software gorilla Microsoft (MSFT) is an exception.

The company announced a 10% increase in its quarterly dividend to 68 cents per share in September 2022. Over the past five years, its quarterly payout is up 62%.

At the current share price, Microsoft offers an annual dividend yield of just over 1%.

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The yield may not seem high, but Microsoft is currently the largest holding in O’Leary’s OUSA, with a 5.08% weighting.

2022 hasn’t been pretty for tech stocks, and Microsoft has also been caught up in the sell-off. Over the past 12 months, shares are down 8%.

But the business is on the right track. For the December quarter, revenue increased 2% year over year to $52.7 billion. On a constant currency basis, revenue growth was a more impressive 7%.

Given the drop in share price, Microsoft could soften contrarian investors something to think about.

home depot

Home Depot (HD) is the second-largest holding at OUSA, accounting for 4.81% of the fund’s weighting.

The home improvement retail giant has around 2,300 stores, each averaging about 105,000 square feet of indoor retail space, dwarfing many of its competitors.

While many brick-and-mortar retailers have tumbled during the pandemic, Home Depot grew its sales nearly 20% to $132.1 billion in fiscal 2020.

And the company continued its momentum as the economy reopened.

Home Depot’s fiscal 2022 revenue rose 4.1% year over year, while earnings per share improved 7.5%.

Last month, the company increased its quarterly dividend by 10% to $2.09 per share. At the current share price, the yield is 2.9%.

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This article is informational only and should not be construed as advice. It is provided without any guarantee.