Up to date on September sixteenth, 2022 by Bob Ciura
Kevin O’Leary is Chairman of O’Shares Investments, however you most likely know him as “Mr. Great”.
He might be seen on CNBC in addition to the tv present Shark Tank. Buyers who’ve seen him on TV have seemingly heard him talk about his funding philosophy.
Mr. Great appears to be like for shares that exhibit three essential traits:
First, they should be high quality firms with sturdy monetary efficiency and stable steadiness sheets.
Second, he believes a portfolio must be diversified throughout totally different market sectors.
Third, and maybe most essential, he calls for revenue—he insists the shares he invests in pay dividends to shareholders.
Be aware: 13F submitting efficiency is totally different than fund efficiency. See how we calculate 13F submitting efficiency right here.
You’ll be able to obtain the whole listing of all of O’Shares Funding Advisor 13F submitting inventory holdings, together with quarterly efficiency, by clicking the hyperlink under:
OUSA owns shares that show a mixture of all three qualities. They’re market leaders with sturdy income, diversified enterprise fashions, and so they pay dividends to shareholders. The listing of OUSA portfolio holdings is an attention-grabbing 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: UnitedHealth Group (UNH)
Dividend Yield: 1.2%
Share of OUSA Portfolio: 1.8%
UnitedHealth Group operates as a diversified well being care firm in the USA. As it’s common on this trade, regardless of UnitedHealth’s large revenues which exceed $250 billion per yr, its internet margins stay razor-thin.
UnitedHealth’s high quality operations and recurring money flows haven’t led to a single unprofitable quarter in over 23 years.
UnitedHealth reported second quarter earnings on July fifteenth, 2022, and outcomes have been excellent, as was up to date steering. Adjusted earnings-per-share got here to $5.57, which was 37 cents forward of expectations, and was virtually 19% higher than the year-ago interval. Income was up virtually 13% to $80.3 billion, which was greater than $600 million forward of estimates.
Each working segments grew income by double-digits as soon as extra, as has been the case for a while. The corporate’s medical care ratio was 81.5% in Q2, down from 82.8% within the year-ago interval. Working prices have been basically flat at 14.6% of income.
The corporate boosted steering to adjusted earnings-per-share of $21.40 to $21.90, so our estimate is the midpoint at $21.65.
Click on right here to obtain our most up-to-date Certain Evaluation report on UNH (preview of web page 1 of three proven under):
No. 9: McDonald’s Company (MCD)
Dividend Yield: 2.2%
Share of OUSA Portfolio: 2.2%
McDonald’s is the world’s main international foodservice retailer with almost 40,000 places in over 100 international locations. 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, complete 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 increased enter prices, regardless of worth 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 sturdy in France, Germany, and Japan offset by weak spot 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 file towards 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 Certain Evaluation report on MCD (preview of web page 1 of three proven under):
No. 8: Lockheed Martin Company (LMT)
Dividend Yield: 2.7%
Share of OUSA Portfolio: 2.4%
Lockheed Martin Company is the world’s largest protection firm. About 60% of the corporate’s revenues comes from the US Division of Protection, with different US authorities companies (10%) and worldwide purchasers (30%) making up the rest.
The corporate consists of 4 enterprise segments: Aeronautics (~40% gross sales) – which produces army plane just like the F-35, F-22, F-16 and C-130; Rotary and Mission Methods (~26% gross sales) – which homes fight ships, naval electronics, and helicopters; Missiles and Hearth Management (~16% gross sales) – which creates missile protection methods; and House Methods (~17% gross sales) – which produces satellites.
Lockheed Martin reported weaker outcomes for Q2 2022 on July nineteenth, 2022. Firm-wide internet gross sales decreased to $15,446M from $17,029M and diluted GAAP earnings per share fell to $1.16 from $6.52 on a year-over-year foundation. The quarter was impacted by decrease gross sales in all segments and pension costs, funding losses, deferred compensation, and debt refinancing prices.
Lockheed Martin’s backlog is roughly $134.64B with a rise in Missiles and Hearth Controls, House and Rotary, and Mission Methods and a decline within the Aeronautics.
Lockheed Martin guided decrease for ~$65,250B in gross sales and ~$21.55 diluted earnings per share in 2022.
Click on right here to obtain our most up-to-date Certain Evaluation report on LMT (preview of web page 1 of three proven under):
No. 7: Apple (AAPL)
Dividend Yield: 0.6%
Share of OUSA Portfolio: 2.5%
Apple revolutionized private know-how with the introduction of the Macintosh in 1984. In the present day the know-how firm designs, manufactures and sells merchandise reminiscent of iPhones, iPads, Mac, Apple Watch and Apple TV. Apple additionally has a providers enterprise that sells music, apps, and subscriptions.
Apple is the #1 holding of Berkshire Hathaway (BRK.B), making the know-how large one of many prime Warren Buffett shares.
On July twenty eighth, 2022, Apple reported Q3 fiscal yr 2022 outcomes for the interval ending June twenty fifth, 2022. (Apple’s fiscal yr ends the final Saturday in September).
For the quarter, Apple generated income of $82.959 billion, a 1.9% improve in comparison with Q3 2021. Product gross sales have been down -0.9%, as a 2.8% improve in iPhones (49% of complete 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 revenue 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 Certain Evaluation report on AAPL (preview of web page 1 of three proven under):
No. 6: Pfizer Inc. (PFE)
Dividend Yield: 3.4%
Share of OUSA Portfolio: 2.7%
Pfizer Inc. is a world pharmaceutical firm that focuses on prescribed drugs and vaccines.
Pfizer’s new CEO accomplished a sequence 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 phase 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 wonderful Q2 2022 outcomes on July twenty eighth, 2022.
Supply: Investor Presentation
Firm-wide income rose 47% and adjusted diluted earnings per share rose 92% on a year-over-year foundation. Pfizer maintained income steering at $98B – $102B and raised adjusted diluted EPS steering to $6.30 – $6.45 for 2022.
Pfizer is a low beta inventory.
Click on right here to obtain our most up-to-date Certain Evaluation report on Pfizer (preview of web page 1 of three proven under):
No. 5: House Depot (HD)
Dividend Yield: 2.5%
Share of OUSA Portfolio: 2.8%
House Depot was based in 1978, and since that point has grown into the main residence 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 improve. 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 frequent inventory repurchases throughout H1 2022, lower than the $6.9 billion spent in H1 2021. Common ticket rose 9.1% in comparison with final yr, from $82.48 to $90.02. Moreover, there was a 5.7% improve 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 steering. For fiscal 2022, administration reaffirmed its earlier steering and expects gross sales development and comparable gross sales development of roughly 3.0%, with an working margin of roughly 15.4%. The corporate will 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 Certain Evaluation report on HD (preview of web page 1 of three proven under):
No. 4: Verizon Communications (VZ)
Dividend Yield: 7.6%
Share of OUSA Portfolio: 3.0%
Verizon is a communication providers large, and is likely one of the largest wi-fi carriers within the nation. Wi-fi contributes three-quarters of all revenues, and broadband and cable providers account for a few quarter of gross sales. The corporate’s community covers ~300 million individuals and 98% of the U.S.
Verizon has now launched 5G Extremely-Wideband in a number of cities because it continues its rollout of 5G service. Clients in elements of Atlanta, Dallas, Detroit, Indianapolis, Omaha, and Washington, D.C. might entry the corporate’s 5G community. Verizon is the primary of the main carriers to activate the 5G service.
On July 22, 2022, the corporate reported the fiscal yr’s second-quarter and first six months outcomes. Income was flat yr over yr (YoY) at $33.8 billion for the quarter in comparison with the second quarter in 2021. Earnings got here in at $1.24 per share, a lower of 11.4% in comparison with the $1.40 per share the corporate made in 2Q201.
Supply: Investor Presentation
One in all Verizon’s key aggressive benefits is that it’s typically thought-about the superb wi-fi supplier throughout the U.S. that is evidenced by the company’s Wi-Fi web additions and really low churn price. This dependable service permits Verizon to protect its shopper base along with delivering the group the chance to move purchasers to higher-priced plans.
Verizon can be rolling out 5G service, which is able to give it a bonus over different carriers. One other benefit for Verizon is the inventory’s capacity to resist a downturn out there.
Click on right here to obtain our most up-to-date Certain Evaluation report on VZ (preview of web page 1 of three proven under):
No. 3: Procter & Gamble (PG)
Dividend Yield: 2.6%
Share of Portfolio: 3.7%
Procter & Gamble is a stalwart amongst dividend shares. It has elevated its dividend for the previous 65 years in a row. This makes the corporate one in every of solely 45 Dividend Kings, a listing of shares with 50+ years of rising dividends.
It has finished this by changing into a world shopper staples large. It sells its merchandise in additional than 180 international locations all over the world with annual gross sales of greater than $70 billion. A few of its core manufacturers embrace Gillette, Tide, Charmin, Crest, Pampers, Febreze, Head & Shoulders, Bounty, Oral-B, and plenty of extra.
These merchandise are in excessive demand whatever the state of the economic system, making the corporate slightly recession-proof.
On April twelfth, 2022, Procter & Gamble raised its dividend by 5.0%, from $0.8698 per quarter to $0.9133.
Supply: Investor Presentation
In late July, Procter & Gamble reported (7/29/22) monetary outcomes for the fourth quarter of fiscal 2022 (its fiscal yr ends June thirtieth). The corporate grew its gross sales and its natural gross sales 3% and seven%, respectively, over the prior yr’s quarter.
Natural gross sales development resulted from 8% worth hikes, which have been partly offset by a -1% lower in volumes. Regardless of the sturdy headwind from excessive value inflation, which diminished gross margin by 370 foundation factors, adjusted earnings-per-share grew 7%. The agency gross sales amid sturdy worth hikes are a testomony to the energy of the manufacturers of Procter & Gamble. The corporate expects 3%-5% development of natural gross sales in fiscal 2023 and 0%-4% development of earnings-per-share.
Click on right here to obtain our most up-to-date Certain Evaluation report on PG (preview of web page 1 of three proven under):
No. 2: Johnson & Johnson (JNJ)
Dividend Yield: 2.7%
Share of OUSA Portfolio: 4.0%
Johnson & Johnson is a world healthcare large. The corporate presently operates three segments: Client, Pharmaceutical, and Medical Gadgets & Diagnostics. The company contains some 250 subsidiary firms with operations in 60 international locations and merchandise bought in over 175 international locations. Johnson & Johnson had gross sales of $93.8 billion worldwide through the calendar yr 2021.
Johnson & Johnson’s manufacturers embrace quite a few family names of medicines and first support provides. Its well-known shopper merchandise embrace the Band-Support Model line of bandages, Tylenol medicines, 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 Prescription drugs.
The corporate’s most up-to-date earnings report was delivered on July nineteenth 2022, for the second quarter. Outcomes have been higher than anticipated on each income and income, however the firm lowered steering for the total yr, which it attributed to a a lot stronger US greenback.
Supply: Investor presentation, web page 14
For the second quarter, adjusted earnings-per-share got here to $2.59, which was 4 cents forward of expectations. Income was $24 billion, up 3% year-over-year and $180 million forward of estimates.
Johnson & Johnson has averaged 7% development in earnings-per-share for the previous decade, which is spectacular given its large measurement. The corporate has been capable of transfer the needle steadily by means of a mix of upper gross sales, higher revenue margins, and a slight discount within the float by means of buybacks.
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 Certain Evaluation report on JNJ (preview of web page 1 of three proven under):
No. 1: Microsoft Company (MSFT)
Dividend Yield: 1.0%
Share of OUSA Portfolio: 4.5%
Microsoft Company, based in 1975 and headquartered in Redmond, WA, develops, manufactures and sells each software program and {hardware} to companies and shoppers.
Its choices embrace working methods, enterprise software program, software program improvement instruments, video video games and gaming {hardware}, and cloud providers.
In late July, Microsoft reported (7/26/22) monetary outcomes for the fourth quarter of fiscal 2022 (Microsoft’s fiscal yr ends June thirtieth). The corporate grew its income 12% over final yr’s quarter. The expansion was throughout the board with Productiveness and Enterprise Processes, Clever Cloud and Private Computing rising 13%, 20%, and a couple of% respectively. Azure, Microsoft’s high-growth cloud platform, grew 20% year-over-year. Adjusted earnings-per-share grew 3%, from $2.17 to $2.23.
Microsoft inventory can be held by different well-known traders. For instance, Microsoft inventory is a serious holding within the Invoice Gates portfolio.
Click on right here to obtain our most up-to-date Certain Evaluation report on Microsoft (preview of web page 1 of three proven under):
Last Ideas
Kevin O’Leary has develop into a family identify as a consequence 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 Certain Dividend’s. Particularly, Mr. Great usually invests in shares with giant and worthwhile companies, with sturdy steadiness sheets and constant dividend development yearly.
Not all of those shares are presently rated as buys within the Certain Evaluation Analysis Database, which ranks shares primarily based on anticipated complete return as a consequence of a mix of earnings per share development, dividends, and adjustments within the price-to-earnings a number of.
Nevertheless, a number of of those 10 shares are beneficial holdings for a long-term dividend development portfolio.
Extra Sources
See the articles under for evaluation on different main funding corporations/asset managers/gurus:
If you’re interested by discovering extra high-quality dividend development shares appropriate for long-term funding, the next Certain Dividend databases might be helpful:
The key home inventory market indices are one other stable useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month:
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