Home Depot (HD)
Home Depot may not seem as exciting as crypto, but it’s the top holding at OUSA, accounting for 6.1% of the fund’s weight.
The home improvement retail giant has around 2,300 stores, with each one averaging approximately 105,000 square feet of indoor retail space, dwarfing many competitors.
And while other brick-and-mortar retailers have floundered during the pandemic, Home Depot grew its sales nearly 20% in fiscal 2020 to $132.1 billion. It even boosted its quarterly dividend by 10% earlier this year and now yields 1.6%.
Shares aren’t cheap, though.
After rallying more than 55% year to date, Home Depot trades at over $400 per share. But you can always get a smaller piece of the company using a popular app that allows you to buy fractions of shares with as much money as you are willing to spend.
Tech stocks aren’t known for their dividends, but software gorilla Microsoft is an exception.
The company announced an 11% increase to its quarterly dividend to 62 cents per share in September. Over the past five years, its payout has grown by 59%.
So it shouldn’t come as a surprise that Microsoft is the second-largest holding in O’Leary’s OUSA.
Business has been booming of late, partially driven by the pandemic-fueled demand for its cloud-computing and video-gaming offerings.
In the September quarter, Microsoft's revenue grew 22% year-over-year to $45.3 billion while adjusted earnings per share surged 25% to $2.27.
Year-to-date, Microsoft shares have returned an impressive 53%, easily topping other trillion-dollar tech giants like Apple (31%) and Amazon (11%).
Still, if you’re hesitant to go deep on tech stocks near all-time highs, you can always build a diversified portfolio automatically just by using your “spare change.”
Procter & Gamble (PG)
Procter & Gamble belongs to a group of companies commonly known as the Dividend Kings: publicly traded businesses with at least 50 consecutive years of dividend increases.
In fact, P&G makes the list with ease. In April, the board of directors announced a 10% increase to the quarterly payout, marking the company’s 65th consecutive annual dividend hike.
It’s not hard to see why the company is able to maintain such a streak.
P&G is a consumer staples giant with a portfolio of trusted brands like Bounty paper towels, Crest toothpaste, Gillette razor blades and Tide detergent. These are products households buy on a regular basis, no matter how the economy or their personal finances are faring.
Thanks to the recession-resistant nature of P&G’s business, it can deliver reliable dividends through thick and thin.
Shares are up 10% year-to-date. That may not seem like much compared to Home Depot and Microsoft, but long-term investors can look back on many decades of strong performance.
The company offers an annual dividend yield of 2.3% and is currently the third-largest holding in OUSA with a weighting of 4.8%.
O’Leary’s other ‘fine’ asset
Dividends provide a great source of passive income, but you don’t have to limit yourself to the stock market.
These days, retail investors have access to a variety of alternative investments, many of which offer impressive cash income.
Traditionally, these opportunities have been available only to the ultra rich, like O’Leary.
But now, with the help of new platforms, a single $500 investment can build a fixed-income portfolio spread across multiple asset classes that include fine art, commercial real estate and even marine finance.
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.