Bill Gates: A Billionaire with 82% of His Portfolio in Just 4 Stocks

Most investors are familiar with Bill Gates, the billionaire philanthropist and co-founder of Microsoft. After leading the technology giant for a quarter of a century, Gates stepped down as CEO to focus on his charitable endeavors. Today, he is worth an estimated $127.7 billion, making him the seventh-richest person in the world according to Forbes.

Gates’ charitable efforts are primarily focused on the Bill & Melinda Gates Foundation Trust. With a mission to create a world where every person has the opportunity to live a healthy, productive life, the foundation has spent nearly $54 billion since 2000, addressing the toughest and most important global problems. As a result, the trust’s portfolio is constantly changing. However, there are four well-known stocks that dominate their holdings.

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1. Microsoft: 34%

It’s no surprise that Microsoft leads the pack, considering Gates’ close connection to the company. He even kickstarted the foundation by donating a significant portion of his Microsoft shares. The Gates Foundation now owns more than 38 million shares of Microsoft stock, valued at $14.3 billion.

Under the leadership of CEO Satya Nadella, Microsoft has shifted its focus from on-premises software to the cloud, which has proven to be incredibly successful. In fact, Microsoft Azure, its cloud infrastructure, was the world’s second-largest provider in the calendar fourth quarter of 2023, with a 26% market share. It also outperformed its competitors, Amazon Web Services and Alphabet’s Google Cloud, with a 30% year-over-year growth rate. Additionally, cloud revenue now represents 54% of Microsoft’s total revenue, making it the fastest-growing segment within the company.

One of Microsoft’s biggest opportunities lies in artificial intelligence (AI). As a cloud leader, Microsoft has a unique advantage in selling AI services to its customers. In the most recent quarter, Azure’s growth included a significant contribution from AI services. Furthermore, Microsoft has a track record of consistent dividends since 2004, with 14 consecutive annual increases. With a low payout ratio and strong profitability, the company has room to continue increasing its dividend in the future.

2. Berkshire Hathaway: 17%

Warren Buffett, another renowned billionaire and philanthropist, shares Gates’ vision and has pledged to donate all his Berkshire Hathaway stock to charity. Since joining Gates in 2006, he has donated $36 billion to the Gates Foundation through 2022, encouraging other wealthy individuals to do the same. As a result, the Gates Foundation holds nearly 20 million shares of Berkshire Hathaway stock, valued at $7.1 billion.

Berkshire Hathaway is known for its diversified businesses and stock holdings, providing instant diversification and steady cash flow until the funds are needed for charitable causes. The company’s insurance businesses, including GEICO and General Re, performed exceptionally well in the past year, contributing to 40% of Berkshire’s operating income.

3. Canadian National Railway: 16%

Another stock in the Gates Foundation’s portfolio is Canadian National Railway, with nearly 55 million shares valued at $6.9 billion. Warren Buffett’s appreciation for railroads likely influenced Gates’ investment choice. Railroads are considered a cost-effective and environmentally friendly way to transport goods, and Canadian National Railway has a long operating history, wide economic moat, and steep barriers to entry. These qualities make it an attractive investment not only for Buffett but also for Gates.

The company has a remarkable 18-year track record of consistently increasing dividends, currently yielding 1.9%. With a relatively low payout ratio, Canadian National Railway has the potential for future dividend increases.

4. Waste Management: 15%

The saying “one person’s trash is another person’s treasure” holds true for the Gates Foundation, as it holds over 35 million shares of Waste Management stock, valued at $6.3 billion. Waste Management provides collection services for trash and recycling, offering a consistent and essential service. Additionally, the company harnesses gas from its landfills, which can be used to generate electricity or fuel vehicles.

Waste Management has increased its dividend for 15 consecutive years, currently yielding 1.4%. With a payout ratio of 49%, there is room for further dividend growth.

A Common Thread

One notable theme among the Gates Foundation Trust holdings is their focus on dividend-paying stocks. These stocks generate income that can be used for charitable giving without the need to sell the underlying shares. In fact, the portfolio generated nearly $500 million in dividend income in 2023.

For investors seeking income, Microsoft, Berkshire Hathaway, Canadian National Railway, and Waste Management are excellent options to consider.

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