Up to date on November twenty second, 2022 by Bob Ciura

Kevin O’Leary is Chairman of O’Shares Funding Advisors, however you in all probability know him as “Mr. Fantastic”.

He could be seen on CNBC in addition to the tv present Shark Tank. Traders who’ve seen him on TV have seemingly heard him focus on his funding philosophy.

Mr. Fantastic seems for shares that exhibit three foremost traits:

1. First, they have to be high quality corporations with robust monetary efficiency and stable steadiness sheets.
2. Second, he believes a portfolio needs to be diversified throughout completely different market sectors.
3. Third, and maybe most essential, he calls for earnings—he insists the shares he invests in pay dividends to shareholders.

You may obtain the whole record of all of O’Shares Funding Advisors inventory holdings, together with quarterly efficiency, by clicking the hyperlink beneath:

 

OUSA owns shares that show a mixture of all three qualities. They’re market leaders with robust income, diversified enterprise fashions, they usually pay dividends to shareholders. The record of OUSA portfolio holdings is an fascinating supply of high quality dividend development shares.

This text analyzes the fund’s largest holdings intimately.

Desk of Contents

The highest 10 holdings from the O’Shares FTSE U.S. High quality Dividend ETF are listed so as of their weighting within the fund, from lowest to highest.

No. 10: McDonald’s Company (MCD)

Dividend Yield: 2.2%

Share of OUSA Portfolio: 3.25%

McDonald’s is the world’s main international foodservice retailer with almost 40,000 places in over 100 nations. Roughly 93% of the shops are independently owned and operated. The corporate has raised its dividend yearly since paying its first dividend in 1976, qualifying it as a Dividend Aristocrat.

On July twenty sixth, 2022, McDonald’s reported Q2 2022 outcomes. For the quarter, whole income got here in at $5,718.4M, a (-3%) lower from $5887.9M in comparison with Q1 2021 on 4% rise in systemwide gross sales offset by forex headwinds. Income fell (-15%) at company-owned shops, whereas income elevated 7% at franchised eating places. Earnings declined (-46%) to $1.60 per share in comparison with $2.95 per share in comparable intervals due to larger enter prices, regardless of value hikes.

On a geographic foundation, gross sales elevated +3.7% within the US, +13.0% within the worldwide markets, and +16.0% within the worldwide developmental licensed markets. Development was robust in France, Germany, and Japan offset by weak point in China due to COVID-19 restrictions.

McDonald’s is a really recession-resistant firm. Its aggressive benefit lies in its international scale, immense community of eating places, well-known model, and actual property belongings. Certainly, the corporate’s superior monitor report in opposition to quite a few opponents has illustrated why these points are essential to the corporate’s success.

Click on right here to obtain our most up-to-date Positive Evaluation report on MCD (preview of web page 1 of three proven beneath):

No. 9: Apple (AAPL)

Dividend Yield: 0.6%

Share of OUSA Portfolio: 3.48%

Apple revolutionized private expertise with the introduction of the Macintosh in 1984. At present the expertise firm designs, manufactures and sells merchandise akin to iPhones, iPads, Mac, Apple Watch and Apple TV. Apple additionally has a companies enterprise that sells music, apps, and subscriptions.

Apple is the #1 holding of Berkshire Hathaway (BRK.B), making the expertise big one of many prime Warren Buffett shares.

On July twenty eighth, 2022, Apple reported Q3 fiscal 12 months 2022 outcomes for the interval ending June twenty fifth, 2022. (Apple’s fiscal 12 months ends the final Saturday in September).

For the quarter, Apple generated income of $82.959 billion, a 1.9% enhance in comparison with Q3 2021. Product gross sales have been down -0.9%, as a 2.8% enhance in iPhones (49% of whole gross sales), was greater than offset by declines in Mac, iPad, and Wearables, House and Equipment. Service gross sales elevated 12.1% to $19.6 billion and made up 23.6% of all gross sales within the quarter. Web earnings equaled $19.4 billion or $1.20 per share in comparison with $21.7 billion or $1.30 per share in Q3 2021.

Click on right here to obtain our most up-to-date Positive Evaluation report on AAPL (preview of web page 1 of three proven beneath):

No. 8: T. Rowe Worth Group (TROW)

Dividend Yield: 3.9%

Share of OUSA Portfolio: 3.70%

T. Rowe Worth Group, based in 1937 and headquartered in Baltimore, MD, is among the largest publicly traded asset managers. The corporate supplies a broad array of mutual funds, sub-advisory companies, and separate account administration for particular person and institutional traders, retirement plans and monetary intermediaries.

On February eighth, 2022, T. Rowe Worth declared a $1.20 quarterly dividend, representing a 11.1% enhance and marking the corporate’s thirty sixth 12 months of accelerating its payout.

On October twenty eighth, 2022, T. Rowe Worth introduced third quarter outcomes for the interval ending September thirtieth, 2022. Income decreased 18.5% to $1.59 billion, which was $60 million greater than anticipated. Adjusted earnings-per-share of $1.86 in comparison with $3.27 within the prior 12 months, however was $0.05 above estimates.

Through the quarter, belongings underneath administration (AUM) declined $79.7 billion to $1.23 trillion. This decline was because of internet shopper outflows of $24.6 billion, internet distributions not reinvested of $55.1 billion, shopper transfers of $3.3 billion, and market deprecation. Working bills elevated 5.8% to $1 billion year-over-year and 20% sequentially.

Click on right here to obtain our most up-to-date Positive Evaluation report on TROW (preview of web page 1 of three proven beneath):

No. 7: Merck & Firm (MRK)

Dividend Yield: 2.6%

Share of OUSA Portfolio: 3.76%

Merck & Firm is among the largest healthcare corporations on this planet. Merck manufactures prescription medicines, vaccines, biologic therapies, and animal well being merchandise. Merck employs 67,000 folks world wide and generates annual revenues of ~$59 billion. On June 2nd, 2021, Merck accomplished its beforehand introduced spinoff of its ladies’s well being and biosimilar portfolio into Organon & Co (OGN).

On October twenty seventh, 2022, Merck reported third quarter outcomes for the interval ending September thirtieth, 2022. Income grew 14.1% to $15 billion, topping expectations by $950 million. Adjusted internet earnings of $4.7 billion, or $1.85 per share, in comparison with adjusted internet earnings of $4.5 billion, or $1.78 per share, within the prior 12 months and was $0.14 above estimates. Forex alternate diminished income outcomes by 4%. On a reported foundation, pharmaceutical income elevated 14% to only underneath $13 billion for the quarter.

Click on right here to obtain our most up-to-date Positive Evaluation report on Merck (preview of web page 1 of three proven beneath):

No. 6: Marsh & McLennan Firms (MMC)

Dividend Yield: 1.4%

Share of OUSA Portfolio: 3.82%

Marsh McLennan is a world skilled companies holding firm which is lively in threat, technique, and folks. The 4 foremost international companies of the company are Marsh (insurance coverage dealer and threat administration), Man Carpenter (reinsurance and capital methods), Mercer (human assets and consulting) and Oliver Wyman (technique, financial and model consulting).

The corporate has shoppers in over 130 nations and 86,000 colleagues globally. The company generates almost $20 billion in annual revenues.

On July thirteenth, Marsh McLennan declared a ten.3% quarterly dividend enhance to $0.59 per share. Marsh McLennan reported third quarter outcomes on October twentieth, 2022. Consolidated income for the quarter elevated 4% year-over-year to $4.8 billion. All of MMC’s enterprise reported larger income in comparison with final 12 months. Adjusted working earnings grew 12% to $851 million, and adjusted EPS rose 9% to $1.18.

The corporate repurchased roughly 3.1 million shares of widespread inventory for $500 million within the third quarter. On the finish of the quarter, MMC had $802 million of money and money equivalents.

Click on right here to obtain our most up-to-date Positive Evaluation report on MMC (preview of web page 1 of three proven beneath):

No. 5: S&P International (SPGI)

Dividend Yield: 1.0%

Share of Portfolio: 3.95%

S&P International is a worldwide supplier of monetary companies and enterprise info with a market capitalization of $113 billion and income of about $12 billion. Via its numerous segments, it supplies credit score scores, benchmarks and indices, analytics, and different knowledge to commodity market contributors, capital markets, and automotive markets.

S&P International has paid dividends repeatedly since 1937 and has elevated its payout for 49 consecutive years.

S&P reported third quarter earnings on October twenty seventh, 2022, and outcomes have been combined. Adjusted earnings-per-share got here to $2.93, which was 13 cents higher than anticipated. Income, nevertheless, regardless of rising 37% year-over-year to $2.86 billion, was $60 million gentle in opposition to estimates. Adjusted working revenue declined 200bps to 46.0% of income from the year-ago interval.

The corporate has accomplished $11 billion of its $12 billion accelerated share repurchase program put in place earlier this 12 months, and expects to finish the ultimate $1 billion in December. Adjusted income fell 8% year-over-year, and declined 6% on a continuing forex foundation. The corporate is struggling as charges have risen, as that ends in fewer debt issuances from world wide. On an adjusted foundation, earnings-per-share declined from $3.05 to $2.93.

Click on right here to obtain our most up-to-date Positive Evaluation report on SPGI (preview of web page 1 of three proven beneath):

No. 4: Pfizer Inc. (PFE)

Dividend Yield: 3.3%

Share of OUSA Portfolio: 3.97%

Pfizer Inc. is a world pharmaceutical firm that focuses on pharmaceuticals and vaccines.

Pfizer’s new CEO accomplished a collection of transactions considerably altering the corporate construction and technique. Pfizer shaped the GSK Client Healthcare Joint Enterprise in 2019 with GlaxoSmithKline plc (GSK), which incorporates Pfizer’s over-the-counter enterprise. Pfizer owns 32% of the JV. Pfizer spun off its Upjohn section and merged it with Mylan forming Viatris for its off patent, branded and generic medicines in 2020.

Pfizer’s prime merchandise are Eliquis, Ibrance, Prevnar, Enebrel (worldwide), Sutent, Xtandi, Vyndaqel/ Vyndamax, Inlyta, Xeljanz, Plaxlovid, and Comiranty. Pfizer had income of $81.3B in 2021.

Pfizer reported Q3 2022 outcomes on November 1st, 2022.

Supply: Investor Presentation

Companywide income fell 6% and adjusted diluted earnings per share rose 40% to $1.78 versus $1.27 on a year-over-year foundation. Diluted GAAP earnings per share rose 6% to $1.51 from $1.42 in comparable quarters.

Click on right here to obtain our most up-to-date Positive Evaluation report on Pfizer (preview of web page 1 of three proven beneath):

No. 3: Johnson & Johnson (JNJ)

Dividend Yield: 2.6%

Share of OUSA Portfolio: 4.31%

Johnson & Johnson is a world healthcare big. The corporate at present operates three segments: Client, Pharmaceutical, and Medical Gadgets & Diagnostics. The company contains some 250 subsidiary corporations with operations in 60 nations and merchandise offered in over 175 nations. Johnson & Johnson had gross sales of $93.8 billion worldwide in the course of the calendar 12 months 2021.

Johnson & Johnson’s manufacturers embody quite a few family names of medicines and first help provides. Its well-known client merchandise embody the Band-Support Model line of bandages, Tylenol drugs, Johnson’s Child merchandise, Neutrogena pores and skin, magnificence merchandise, Clear & Clear facial wash, and Acuvue contact lenses. Johnson & Johnson’s pharmaceutical arm is Janssen Prescribed drugs.

The corporate’s most up-to-date earnings report was delivered on October 18th, 2022, for the third quarter. Outcomes have been higher than anticipated on each income and income.

Supply: Investor Presentation

For the third quarter, adjusted earnings-per-share got here to $2.55, which was six cents forward of expectations, however in contrast unfavorably to $2.60 within the prior 12 months. Income was $23.8 billion, up 2% year-over-year and $360 million forward of estimates.

Johnson & Johnson narrowed its earnings per share steerage to $10.02 to $10.07 (in comparison with $10.00 to $10.00 beforehand) and lowered its income steerage to be between $93.0 billion and $93.5 billion ($93.3 billion to $94.3 billion beforehand). The steerage revision was a results of the strengthening U.S. greenback.

Johnson & Johnson’s key aggressive benefit is the scale and scale of its enterprise. The corporate is a worldwide chief in a number of healthcare classes. Johnson & Johnson’s diversification permits it to proceed to develop even when one of many segments is underperforming.

The corporate has elevated its dividend for 60 consecutive years, making it a Dividend King.

Click on right here to obtain our most up-to-date Positive Evaluation report on JNJ (preview of web page 1 of three proven beneath):

No. 2: Microsoft Company (MSFT)

Dividend Yield: 1.1%

Share of OUSA Portfolio: 4.54%

Microsoft Company, based in 1975 and headquartered in Redmond, WA, develops, manufactures and sells each software program and {hardware} to companies and customers.

Its choices embody working programs, enterprise software program, software program improvement instruments, video video games and gaming {hardware}, and cloud companies.

In late October, Microsoft reported monetary outcomes for the primary quarter of fiscal 2023. The corporate grew its income by 11% year-over-year. Gross sales of Azure, Microsoft’s high-growth cloud platform, grew 35%. Nonetheless, adjusted earnings-per-share decreased by -13%, from $2.71 to $2.35, largely because of a robust greenback, which diminished earnings from worldwide markets, in addition to manufacturing shutdowns in China and weak traits within the PC market.

Microsoft has a large moat within the working system & Workplace enterprise models and a robust market place in cloud computing. It’s unlikely that the corporate will lose market share with its older, established merchandise, whereas cloud computing is such a high-growth business that there’s sufficient room for development for a number of corporations. Microsoft has a famend model and a world presence, which supplies aggressive benefits.

Click on right here to obtain our most up-to-date Positive Evaluation report on Microsoft (preview of web page 1 of three proven beneath):

No. 1: House Depot (HD)

Dividend Yield: 2.4%

Share of OUSA Portfolio: 5.13%

House Depot was based in 1978, and since that point has grown into the main dwelling enchancment retailer with virtually 2,300 shops within the U.S., Canada, and Mexico. In all, House Depot generates annual income of roughly $130 billion.

House Depot reported second quarter 2022 outcomes on August sixteenth. The corporate reported second quarter gross sales of $43.8 billion, a 6.5% year-over-year enhance. Comparable gross sales within the quarter rose 5.8%, and 5.4% within the U.S. particularly. Web earnings equated to $5.2 billion, or $5.05 per share, in comparison with $4.8 billion, or $4.53 per share in Q2 2021.

The corporate spent almost $4.0 billion in widespread inventory repurchases throughout H1 2022, lower than the $6.9 billion spent in H1 2021. Common ticket rose 9.1% in comparison with final 12 months, from $82.48 to $90.02. Moreover, there was a 5.7% enhance in gross sales per retail sq. foot, from $663.05 to $700.62.

As of the tip of the second quarter, House Depot has money and money equivalents equal to $1.26 billion. Management has upgraded steerage. For fiscal 2022, administration reaffirmed its earlier steerage and expects gross sales development and comparable gross sales development of roughly 3.0%, with an working margin of roughly 15.4%. The corporate may even pay $1.6 billion in internet curiosity expense for 2022. Lastly, diluted EPS development is predicted to be mid-single digits.

Click on right here to obtain our most up-to-date Positive Evaluation report on HD (preview of web page 1 of three proven beneath):

Closing Ideas

Kevin O’Leary has turn out to be a family title because of his appearances on the TV present Shark Tank. However he’s additionally a widely known asset supervisor, and his funding philosophy largely aligns with Positive Dividend’s. Particularly, Mr. Fantastic sometimes invests in shares with giant and worthwhile companies, with robust steadiness sheets and constant dividend development yearly.

Not all of those shares are at present rated as buys within the Positive Evaluation Analysis Database, which ranks shares based mostly on anticipated whole return because of a mix of earnings per share development, dividends, and modifications within the price-to-earnings a number of.

Nonetheless, a number of of those 10 shares are priceless holdings for a long-term dividend development portfolio.

Further Sources

See the articles beneath for evaluation on different main funding corporations/asset managers/gurus:

In case you are excited about discovering extra high-quality dividend development shares appropriate for long-term funding, the next Positive Dividend databases will likely be helpful:

The main home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month: