The demise of cryptocurrency exchange FTX has affected quite a few celebrities. So does Kevin O’Leary – a star on CNBC’s Shark Tank program – who was a spokesman and investor in the exchange.
He is called by the famous economist Nouriel Roubini.
“Kevin O’Leary is a paid hack for FTX,” Roubini said at Abu Dhabi Finance Week. “I hope CNBC gets rid of him.”
Sure, O’Leary has been one of the more outspoken cryptocurrency proponents, but that’s not his entire investment strategy – far from it.
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mr. Wonderful actually believes in investing in dividend stocks.
“When I started doing some research, I discovered an interesting fact that changed my investment philosophy forever,” he said in an interview with Forbes. “Over the past 40 years, 71% of market returns have come from dividends, not capital appreciation.”
“So rule number one for me is I will never own things that don’t pay a dividend. Ever.”
If you share the same view, here’s a rundown of the three largest holdings in O’Leary’s flagship ETF: ALPS O’Shares US Quality Dividend ETF (OUSA).
Home Depot (NYSE:HD)
Home Depot may not seem as exciting as crypto, but it’s the top holding at OUSA, accounting for 5.08% of the fund’s weight.
The home improvement retail giant has about 2,300 stores, each averaging about 105,000 square feet of indoor retail space, dwarfing many competitors.
While many brick-and-mortar retailers struggled during the pandemic, Home Depot sales grew nearly 20% to $132.1 billion in fiscal 2020.
And the company continued its momentum as the economy picked up again.
In Home Depot’s third quarter of fiscal 2022, sales increased 5.6% year over year, while earnings per share improved 8.2%.
The company also increased its quarterly dividend by 15.2% to $1.90 per share earlier this year. At the current price of the share, it yields 2.4%.
Tech stocks aren’t known for their dividends, but software gorilla Microsoft is an exception.
The company announced a 10% quarterly dividend increase to 68 cents per share in September. Over the past five years, the quarterly payout has increased by 62%.
So it should come as no surprise that Microsoft is the second largest stake in O’Leary’s OUSA.
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Of course, 2022 wasn’t fun for technology stocks, and Microsoft was also caught up in the sell-off. Year-to-date, shares are down 27%.
But business is on the right track. In the September quarter, revenue increased 11% from a year ago to $50.1 billion. On a constant currency basis, revenue growth was a more impressive 16%.
In particular, revenue from Microsoft’s Intelligent Cloud segment was up 20% year over year to $20.3 billion.
Given the drop in share price, Microsoft could give recalcitrant investors something to think about.
Johnson & Johnson (NYSE:JNJ)
With entrenched positions in the consumer health, pharmaceutical and medical device markets, healthcare giant Johnson & Johnson has delivered consistent returns for investors throughout economic cycles.
Many of the company’s health brands, such as Tylenol, Band-Aid, and Listerine, are household names. In total, JNJ has 29 products that can each generate more than $1 billion in annual sales.
Johnson & Johnson not only records recurring annual profits, but also consistently grows them: Over the past 20 years, Johnson & Johnson’s adjusted revenues have grown an average of 8% per year.
JNJ announced its 60th consecutive annual dividend increase in April and is now yielding 2.6%.
The stock is also showing its resilience in this ugly market: While the S&P 500 is down double digits so far, JNJ shares are up 1% over the same period.
The company is currently the third largest holding in OUSA with a weighting of 4.25%.
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This article provides information only and should not be taken as advice. It comes without any kind of warranty.