Bill Gates’ Portfolio: 5 Dividend Stocks Held By The World’s Richest Man

Billionaire Bill Gates is the world’s richest man, with a net worth of $86 billion, as estimated by Forbes. After having co-founded Microsoft Corporation (NASDAQ:MSFT), which later became the world’s largest software company, Bill Gates has considerably expanded his fortune not only through ownership of Microsoft stock, but also through investing. Bill Gates doesn’t reveal his portfolio of investments, but we can get an idea about his holdings by looking at the 13D and 13G filings of his investment arm, Cascade Investment, as well as by looking at the 13F filings reported by his charity, the Bill & Melinda Gates Foundation Trust.

When it comes to billionaires, we mere mortals always want to take a peek and get a glimpse into their lives, lifestyles, and routines that helped them develop the skills and discipline that led to their success and wealth. To that end, be sure to check out our list of 20 surprising facts about Bill Gates’ House.

When it comes to investing, a fact that is often overlooked is that Bill Gates is not solely responsible for his portfolio. In fact, he only takes care of his investments in technology and biotech, which are not even held by Cascade Investment, so little-to-nothing is known about them. The bulk of Bill Gates’ portfolio is handled by Michael Larson, who also manages the Bill & Melinda Gates Foundation Trust. Larson is responsible for Gates’ investments in property and non-technology stocks and has been running Cascade since 1994. Due to the secretive nature of the asset management firm (Cascade does not label itself as a family office), we can only get a slight idea about its returns from various articles in the media. Between 1995 and 2015, Cascade has reportedly had a compound annual return of 11%, while during the financial crisis, its losses were smaller than those of the broader market.

At Insider Monkey, we follow hundreds of investors like the Bill & Melinda Gates Foundation Trust. By analyzing their filings with the Securities and Exchange Commission, we can identify the stocks that these investors are collectively bullish on. We then share those stocks with our premium subscribers as part of our flagship strategy, which has returned over 44% since February 2016.

Even though there is not much information about Larson’s investment principles, judging by the publicly disclosed filings, he has a rather conservative approach and prefers to hold positions in a relatively small number of stocks for long periods of time. According to the 13F filings of the Bill & Melinda Gates Foundation Trust, out of 18 positions held at the end of March, more than half have been included in the Trust’s portfolio for over a decade. It’s also worth mentioning that several of the Trust’s long-term holdings have solid dividend yields.

With this in mind, let’s take a look at five dividend stocks that are held by Bill Gates via the Bill & Melinda Gates Foundation Trust, beginning on the next page.

5. Waste Management, Inc. (NYSE:WM)

Let’s start with Waste Management, Inc. (NYSE:WM), which is the second-largest holding in the Bill & Melinda Gates Foundation Trust’s equity portfolio as of the end of March. The fund disclosed holding 18.63 million shares of the company worth $1.36 billion. It should also be mentioned that Waste Management, Inc. (NYSE:WM) is one of the oldest investments held by the Trust, having been included in its equity portfolio since 2002. The stock has gained over 200% since then. The company pays a dividend of $0.43 per share, which gives its stock a yield of 2.30%.

Because Waste Management, Inc. (NYSE:WM) is the largest waste and recycling company in North America, it has been able to consistently generate cash flow, which in turn has allowed it to increase its dividends consistently for the last 14 years. Waste Management, Inc. (NYSE:WM) is also well positioned to be a cash flow-generating machine over the long-term, as it owns 240 landfills and a large network of recycling facilities. Even though its landfill business might decline as consumers become more aware of environmental issues and reduce their waste, its big recycling business helps offset some of the risks. Including Bill Gates’ Trust, there are 29 funds in our database holding shares of Waste Management, Inc. (NYSE:WM) as of the end of March, down by seven funds over the quarter.

4. Wal-Mart Stores Inc (NYSE:WMT)

Then there is Wal-Mart Stores Inc (NYSE:WMT), in which the Bill & Melinda Gates Foundation Trust owns 11.60 million shares worth $836.34 million. Wal-Mart Stores Inc (NYSE:WMT) is the only dividend aristocrat in which the Trust is invested and the stock currently has a yield of 2.70%. Wal-Mart Stores Inc (NYSE:WMT) has a tough battle ahead of it as it tries to take on Amazon.com, Inc. (NASDAQ:AMZN) in the online retail space. While still a leader in terms of overall sales, having generated $482 billion last year, versus Amazon’s $136 billion, Wal-Mart will have to adopt changes as the online retail industry expands to include groceries, a development that seems imminent now that Amazon has bought Whole Foods.

However, the good news is that Wal-Mart Stores Inc (NYSE:WMT) has the infrastructure required to perform well, as it has over 5,000 locations in the U.S, including over 3,000 Supercentres. Moreover, their close proximity to residential customers means that Wal-Mart can easily provide same-day delivery to its customers. In any case, the U.S retail market is worth over $5.0 trillion, so there’s plenty of room for both Wal-Mart and Amazon. Overall, 48 funds tracked by Insider Monkey disclosed long positions in Wal-Mart Stores Inc (NYSE:WMT) in the latest round of 13F filings, compared to 54 funds a quarter earlier.

3. Caterpillar Inc. (NYSE:CAT)

Caterpillar Inc. (NYSE:CAT), which has a dividend yield of 2.90%, is represented in the Bill & Melinda Gates Foundation Trust’s equity portfolio by a $1.04 billion stake containing 11.26 million shares. The stake makes the fund Caterpillar Inc. (NYSE:CAT)’s largest shareholder among the 38 funds in our database that are bullish on the stock as of the end of March.

The Trust has held shares of the mining and construction equipment maker since 2005, during which time the stock has more than doubled in value. Caterpillar Inc. (NYSE:CAT) has also more than tripled its dividend during that time, to $0.78 from $0.25 per share. In its latest financial report, Caterpillar Inc. (NYSE:CAT) delivered EPS of $1.28 in the first quarter, which was significantly above the consensus estimate of $0.62. In addition, its revenue of $9.82 billion was $550 million higher than expected and also rose by 3.8% on the year, which was its first quarterly revenue growth since 2014.

2. United Parcel Service, Inc. (NYSE:UPS)

In United Parcel Service, Inc. (NYSE:UPS), the Bill & Melinda Gates Foundation Trust disclosed a $485.57 million stake that contained 4.53 million shares as of March 31. Overall, the company registered a decline in popularity among the funds we track, as the number of investors long the stock fell to 36 from 41 between January and March. In 2017, United Parcel Service, Inc. (NYSE:UPS) increased its dividend to $0.83 from $0.78, which provides its stock with a yield of almost 3%.

United Parcel Service, Inc. (NYSE:UPS) is among the best stocks to invest in for the long-term. It operates in an industry dominated by a few well-established companies like FedEx Corporation (NYSE:FDX) and is unlikely to face a lot of competition because of high barriers to entry. Providing delivery services requires a large fleet of trucks, planes, and cargo ships and a large network of warehouses and outlet locations, all of which are capital intensive.

There are concerns that Amazon.com, Inc. (NASDAQ:AMZN) might undercut delivery companies like United Parcel Service, Inc. (NYSE:UPS) because the eCommerce giant has been building its own fleet of planes and trucks. However, while delivery companies will be affected if Amazon takes delivery into its own hands, the online retail business is very large and continuously growing and traditional retailers seeking to expand their online presence will require companies like United Parcel Service, Inc. (NYSE:UPS) to handle deliveries.

1. Crown Castle International Corp. (REIT) (NYSE:CCI)

Finally, the stock with the highest dividend yield in the Bill & Melinda Gates Foundation Trust’s 13F portfolio is Crown Castle International Corp. (REIT) (NYSE:CCI), which has a yield of 3.75%. At the end of March, the Michael Larson-managed fund owned 5.33 million shares of the REIT, worth $503.69 million.

As people are using their phones ever more frequently and companies like Facebook Inc (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOGL) are investing more in the development of their mobile platforms, the demand for mobile data and mobile network infrastructure will grow and Crown Castle International Corp. (REIT) (NYSE:CCI) stands to benefit a lot from this trend. Crown Castle International Corp. (REIT) (NYSE:CCI), which has a market cap of $37 billion, currently owns around 40,000 cell towers, and thanks to that size, it can afford to invest further in its infrastructure. Including the Trust, 38 funds from our database held shares of Crown Castle International Corp. (REIT) (NYSE:CCI) at the end of the first quarter, compared to 36 funds at the end of 2016.

Disclosure: None