Updated on November 22nd, 2022 by Bob Ciura
Kevin O’Leary is Chairman of O’Shares Investment Advisors, but you probably know him as “Mr. Wonderful”.
He can be seen on CNBC as well as the television show Shark Tank. Investors who have seen him on TV have likely heard him discuss his investment philosophy.
Mr. Wonderful looks for stocks that exhibit three main characteristics:
- First, they must be quality companies with strong financial performance and solid balance sheets.
- Second, he believes a portfolio should be diversified across different market sectors.
- Third, and perhaps most important, he demands income—he insists the stocks he invests in pay dividends to shareholders.
You can download the complete list of all of O’Shares Investment Advisors stock holdings, along with quarterly performance, by clicking the link below:
OUSA owns stocks that display a mix of all three qualities. They are market leaders with strong profits, diversified business models, and they pay dividends to shareholders. The list of OUSA portfolio holdings is an interesting source of quality dividend growth stocks.
This article analyzes the fund’s largest holdings in detail.
Table of Contents
The top 10 holdings from the O’Shares FTSE U.S. Quality Dividend ETF are listed in order of their weighting in the fund, from lowest to highest.
- McDonald’s Corporation (MCD)
- Apple Inc. (AAPL)
- T. Rowe Price Group (TROW)
- Merck & Company (MRK)
- Marsh & McLennan Companies (MMC)
- S&P Global (SPGI)
- Pfizer Inc. (PFE)
- Johnson & Johnson (JNJ)
- Microsoft Corporation (MSFT)
- Home Depot (HD)
- Final Thoughts
- Additional Resources
No. 10: McDonald’s Corporation (MCD)
Dividend Yield: 2.2%
Percentage of OUSA Portfolio: 3.25%
McDonald’s is the world’s leading global foodservice retailer with nearly 40,000 locations in over 100 countries. Approximately 93% of the stores are independently owned and operated. The company has raised its dividend every year since paying its first dividend in 1976, qualifying it as a Dividend Aristocrat.
On July 26th, 2022, McDonald’s reported Q2 2022 results. For the quarter, total revenue came in at $5,718.4M, a (-3%) decrease from $5887.9M compared to Q1 2021 on 4% rise in systemwide sales offset by currency headwinds. Revenue fell (-15%) at company-owned stores, while revenue increased 7% at franchised restaurants. Earnings declined (-46%) to $1.60 per share compared to $2.95 per share in comparable periods because of higher input costs, despite price hikes.
On a geographic basis, sales increased +3.7% in the US, +13.0% in the international markets, and +16.0% in the international developmental licensed markets. Growth was strong in France, Germany, and Japan offset by weakness in China because of COVID-19 restrictions.
McDonald’s is a very recession-resistant company. Its competitive advantage lies in its global scale, immense network of restaurants, well-known brand, and real estate assets. Indeed, the company’s superior track record against numerous competitors has illustrated why these aspects are important to the company’s success.
Click here to download our most recent Sure Analysis report on MCD (preview of page 1 of 3 shown below):
No. 9: Apple (AAPL)
Dividend Yield: 0.6%
Percentage of OUSA Portfolio: 3.48%
Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today the technology company designs, manufactures and sells products such as iPhones, iPads, Mac, Apple Watch and Apple TV. Apple also has a services business that sells music, apps, and subscriptions.
Apple is the #1 holding of Berkshire Hathaway (BRK.B), making the technology giant one of the top Warren Buffett stocks.
On July 28th, 2022, Apple reported Q3 fiscal year 2022 results for the period ending June 25th, 2022. (Apple’s fiscal year ends the last Saturday in September).
For the quarter, Apple generated revenue of $82.959 billion, a 1.9% increase compared to Q3 2021. Product sales were down -0.9%, as a 2.8% increase in iPhones (49% of total sales), was more than offset by declines in Mac, iPad, and Wearables, Home and Accessories. Service sales increased 12.1% to $19.6 billion and made up 23.6% of all sales in the quarter. Net income equaled $19.4 billion or $1.20 per share compared to $21.7 billion or $1.30 per share in Q3 2021.
Click here to download our most recent Sure Analysis report on AAPL (preview of page 1 of 3 shown below):
No. 8: T. Rowe Price Group (TROW)
Dividend Yield: 3.9%
Percentage of OUSA Portfolio: 3.70%
T. Rowe Price Group, founded in 1937 and headquartered in Baltimore, MD, is one of the largest publicly traded asset managers. The company provides a broad array of mutual funds, sub-advisory services, and separate account management for individual and institutional investors, retirement plans and financial intermediaries.
On February 8th, 2022, T. Rowe Price declared a $1.20 quarterly dividend, representing a 11.1% increase and marking the company’s 36th year of increasing its payout.
On October 28th, 2022, T. Rowe Price announced third quarter results for the period ending September 30th, 2022. Revenue decreased 18.5% to $1.59 billion, which was $60 million more than expected. Adjusted earnings-per-share of $1.86 compared to $3.27 in the prior year, but was $0.05 above estimates.
During the quarter, assets under management (AUM) declined $79.7 billion to $1.23 trillion. This decline was due to net client outflows of $24.6 billion, net distributions not reinvested of $55.1 billion, client transfers of $3.3 billion, and market deprecation. Operating expenses increased 5.8% to $1 billion year-over-year and 20% sequentially.
Click here to download our most recent Sure Analysis report on TROW (preview of page 1 of 3 shown below):
No. 7: Merck & Company (MRK)
Dividend Yield: 2.6%
Percentage of OUSA Portfolio: 3.76%
Merck & Company is one of the largest healthcare companies in the world. Merck manufactures prescription medicines, vaccines, biologic therapies, and animal health products. Merck employs 67,000 people around the world and generates annual revenues of ~$59 billion. On June 2nd, 2021, Merck completed its previously announced spinoff of its women’s health and biosimilar portfolio into Organon & Co (OGN).
On October 27th, 2022, Merck reported third quarter results for the period ending September 30th, 2022. Revenue grew 14.1% to $15 billion, topping expectations by $950 million. Adjusted net income of $4.7 billion, or $1.85 per share, compared to adjusted net income of $4.5 billion, or $1.78 per share, in the prior year and was $0.14 above estimates. Currency exchange reduced revenue results by 4%. On a reported basis, pharmaceutical revenue increased 14% to just under $13 billion for the quarter.
Click here to download our most recent Sure Analysis report on Merck (preview of page 1 of 3 shown below):
No. 6: Marsh & McLennan Companies (MMC)
Dividend Yield: 1.4%
Percentage of OUSA Portfolio: 3.82%
Marsh McLennan is a global professional services holding company which is active in risk, strategy, and people. The four main global businesses of the corporation are Marsh (insurance broker and risk management), Guy Carpenter (reinsurance and capital strategies), Mercer (human resources and consulting) and Oliver Wyman (strategy, economic and brand consulting).
The company has clients in over 130 countries and 86,000 colleagues globally. The corporation generates nearly $20 billion in annual revenues.
On July 13th, Marsh McLennan declared a 10.3% quarterly dividend increase to $0.59 per share. Marsh McLennan reported third quarter results on October 20th, 2022. Consolidated revenue for the quarter increased 4% year-over-year to $4.8 billion. All of MMC’s business reported higher revenue compared to last year. Adjusted operating income grew 12% to $851 million, and adjusted EPS rose 9% to $1.18.
The company repurchased roughly 3.1 million shares of common stock for $500 million in the third quarter. At the end of the quarter, MMC had $802 million of cash and cash equivalents.
Click here to download our most recent Sure Analysis report on MMC (preview of page 1 of 3 shown below):
No. 5: S&P Global (SPGI)
Dividend Yield: 1.0%
Percentage of Portfolio: 3.95%
S&P Global is a worldwide provider of financial services and business information with a market capitalization of $113 billion and revenue of about $12 billion. Through its various segments, it provides credit ratings, benchmarks and indices, analytics, and other data to commodity market participants, capital markets, and automotive markets.
S&P Global has paid dividends continuously since 1937 and has increased its payout for 49 consecutive years.
S&P reported third quarter earnings on October 27th, 2022, and results were mixed. Adjusted earnings-per-share came to $2.93, which was 13 cents better than expected. Revenue, however, despite rising 37% year-over-year to $2.86 billion, was $60 million light against estimates. Adjusted operating profit declined 200bps to 46.0% of revenue from the year-ago period.
The company has completed $11 billion of its $12 billion accelerated share repurchase program put in place earlier this year, and expects to complete the final $1 billion in December. Adjusted revenue fell 8% year-over-year, and declined 6% on a constant currency basis. The company is struggling as rates have risen, as that results in fewer debt issuances from around the world. On an adjusted basis, earnings-per-share declined from $3.05 to $2.93.
Click here to download our most recent Sure Analysis report on SPGI (preview of page 1 of 3 shown below):
No. 4: Pfizer Inc. (PFE)
Dividend Yield: 3.3%
Percentage of OUSA Portfolio: 3.97%
Pfizer Inc. is a global pharmaceutical company that focuses on prescription drugs and vaccines.
Pfizer’s new CEO completed a series of transactions significantly altering the company structure and strategy. Pfizer formed the GSK Consumer Healthcare Joint Venture in 2019 with GlaxoSmithKline plc (GSK), which includes Pfizer’s over-the-counter business. Pfizer owns 32% of the JV. Pfizer spun off its Upjohn segment and merged it with Mylan forming Viatris for its off patent, branded and generic medicines in 2020.
Pfizer’s top products are Eliquis, Ibrance, Prevnar, Enebrel (international), Sutent, Xtandi, Vyndaqel/ Vyndamax, Inlyta, Xeljanz, Plaxlovid, and Comiranty. Pfizer had revenue of $81.3B in 2021.
Pfizer reported Q3 2022 results on November 1st, 2022.
Source: Investor Presentation
Companywide revenue fell 6% and adjusted diluted earnings per share rose 40% to $1.78 versus $1.27 on a year-over-year basis. Diluted GAAP earnings per share rose 6% to $1.51 from $1.42 in comparable quarters.
Click here to download our most recent Sure Analysis report on Pfizer (preview of page 1 of 3 shown below):
No. 3: Johnson & Johnson (JNJ)
Dividend Yield: 2.6%
Percentage of OUSA Portfolio: 4.31%
Johnson & Johnson is a global healthcare giant. The company currently operates three segments: Consumer, Pharmaceutical, and Medical Devices & Diagnostics. The corporation includes some 250 subsidiary companies with operations in 60 countries and products sold in over 175 countries. Johnson & Johnson had sales of $93.8 billion worldwide during the calendar year 2021.
Johnson & Johnson’s brands include numerous household names of medications and first aid supplies. Its well-known consumer products include the Band-Aid Brand line of bandages, Tylenol medications, Johnson’s Baby products, Neutrogena skin, beauty products, Clean & Clear facial wash, and Acuvue contact lenses. Johnson & Johnson’s pharmaceutical arm is Janssen Pharmaceuticals.
The company’s most recent earnings report was delivered on October 18th, 2022, for the third quarter. Results were better than expected on both revenue and profits.
Source: Investor Presentation
For the third quarter, adjusted earnings-per-share came to $2.55, which was six cents ahead of expectations, but compared unfavorably to $2.60 in the prior year. Revenue was $23.8 billion, up 2% year-over-year and $360 million ahead of estimates.
Johnson & Johnson narrowed its earnings per share guidance to $10.02 to $10.07 (compared to $10.00 to $10.00 previously) and lowered its revenue guidance to be between $93.0 billion and $93.5 billion ($93.3 billion to $94.3 billion previously). The guidance revision was a result of the strengthening U.S. dollar.
Johnson & Johnson’s key competitive advantage is the size and scale of its business. The company is a worldwide leader in several healthcare categories. Johnson & Johnson’s diversification allows it to continue to grow even if one of the segments is underperforming.
The company has increased its dividend for 60 consecutive years, making it a Dividend King.
Click here to download our most recent Sure Analysis report on JNJ (preview of page 1 of 3 shown below):
No. 2: Microsoft Corporation (MSFT)
Dividend Yield: 1.1%
Percentage of OUSA Portfolio: 4.54%
Microsoft Corporation, founded in 1975 and headquartered in Redmond, WA, develops, manufactures and sells both software and hardware to businesses and consumers.
Its offerings include operating systems, business software, software development tools, video games and gaming hardware, and cloud services.
In late October, Microsoft reported financial results for the first quarter of fiscal 2023. The company grew its revenue by 11% year-over-year. Sales of Azure, Microsoft’s high-growth cloud platform, grew 35%. However, adjusted earnings-per-share decreased by -13%, from $2.71 to $2.35, mostly due to a strong dollar, which reduced earnings from international markets, as well as production shutdowns in China and weak trends in the PC market.
Microsoft has a wide moat in the operating system & Office business units and a strong market position in cloud computing. It is unlikely that the company will lose market share with its older, established products, whereas cloud computing is such a high-growth industry that there is enough room for growth for multiple companies. Microsoft has a renowned brand and a global presence, which provides competitive advantages.
Click here to download our most recent Sure Analysis report on Microsoft (preview of page 1 of 3 shown below):
No. 1: Home Depot (HD)
Dividend Yield: 2.4%
Percentage of OUSA Portfolio: 5.13%
Home Depot was founded in 1978, and since that time has grown into the leading home improvement retailer with almost 2,300 stores in the U.S., Canada, and Mexico. In all, Home Depot generates annual revenue of approximately $130 billion.
Home Depot reported second quarter 2022 results on August 16th. The company reported second quarter sales of $43.8 billion, a 6.5% year-over-year increase. Comparable sales in the quarter rose 5.8%, and 5.4% in the U.S. specifically. Net earnings equated to $5.2 billion, or $5.05 per share, compared to $4.8 billion, or $4.53 per share in Q2 2021.
The company spent nearly $4.0 billion in common stock repurchases during H1 2022, less than the $6.9 billion spent in H1 2021. Average ticket rose 9.1% compared to last year, from $82.48 to $90.02. Additionally, there was a 5.7% increase in sales per retail square foot, from $663.05 to $700.62.
As of the end of the second quarter, Home Depot has cash and cash equivalents equal to $1.26 billion. Leadership has upgraded guidance. For fiscal 2022, management reaffirmed its previous guidance and expects sales growth and comparable sales growth of roughly 3.0%, with an operating margin of roughly 15.4%. The company will also pay $1.6 billion in net interest expense for 2022. Finally, diluted EPS growth is expected to be mid-single digits.
Click here to download our most recent Sure Analysis report on HD (preview of page 1 of 3 shown below):
Kevin O’Leary has become a household name due to his appearances on the TV show Shark Tank. But he is also a well-known asset manager, and his investment philosophy largely aligns with Sure Dividend’s. Specifically, Mr. Wonderful typically invests in stocks with large and profitable businesses, with strong balance sheets and consistent dividend growth every year.
Not all of these stocks are currently rated as buys in the Sure Analysis Research Database, which ranks stocks based on expected total return due to a combination of earnings per share growth, dividends, and changes in the price-to-earnings multiple.
See the articles below for analysis on other major investment firms/asset managers/gurus:
If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:
- The 20 Highest Yielding Dividend Aristocrats
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 48 stocks with 50+ years of consecutive dividend increases.
- The 20 Highest Yielding Dividend Kings
- The Dividend Achievers List: a group of stocks with 10+ years of consecutive dividend increases.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Monthly Dividend Stocks List: contains stocks that pay dividends each month, for 12 payments per year.
- The 20 Highest Yielding Monthly Dividend Stocks
- The High Dividend Stocks List: high dividend stocks are suited for investors that need income now (as opposed to growth later) by listing stocks with 5%+ dividend yields.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: