Most people have probably heard of Bill Gates, who is known as the co-founder of the company Microsoft (NASDAQ:MSFT) and, more recently, his activities as a billionaire philanthropist.
After leading the technology company he founded for more than a quarter-century, the former CEO left Microsoft to focus on his philanthropic endeavors. Gates is currently worth $105.8 billion (as of this writing), according to ForbesWhich makes him the 14th richest person in the world today. However, he has pledged to donate most of his money to charity so that “the vast majority of my wealth will go to helping as many people as possible.”
To achieve this goal, he established the Bill & Melinda Gates Foundation Fund. “Our mission is to create a world where every person has the opportunity to live a healthy, productive life,” according to the Gates Foundation website. As of the end of 2023, the foundation has paid $77.6 billion since its inception, “to confront the most difficult and important problems.”
While the fund continues to own stakes in twenty companies, to close the second quarter, 81% of its holdings consisted of just four stocks.
1. Microsoft: 30%
It should come as no surprise to anyone that the fund’s largest holding – by a wide margin – is Microsoft, the company Gates founded. The corporation owns approximately 35 million shares of Microsoft stock, valued at approximately $14.3 billion.
However, this is not your grandfather’s Microsoft. Beyond its legacy software, browsers and operating systems, the company is now a major player in a number of emerging industries. It is the second largest cloud infrastructure provider in the world, which also gives Microsoft the top spot in marketing Artificial Intelligence (AI) Products and services for its cloud customers.
Management noted that its Azure Cloud growth included “eight points of AI services,” showing that this strategy is driving additional business. These AI-related services, including an AI-powered digital assistant — Copilot — could generate an additional $143 billion in revenue by 2027, according to analysts at Evercore International Space Station.
There’s also Microsoft’s quarterly dividend, which the company has been paying consistently since 2004 and has collected every year since 2011. The current yield of 0.8% may sound like peanuts, but that’s reinforced by the stock price gain of 202% over the past five years (so writing these lines). Furthermore, a payout ratio of less than 25% shows that there is likely much more upside potential from here.
Given the company’s track record of success, I understand why Gates was interested in Microsoft. I think it will remain one of his most profitable investments – which is why I own shares.
2. Berkshire Hathaway: 23%
Fellow billionaire philanthropist Warren Buffett, CEO Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRC.B)He joined Gates in pledging to donate the vast majority of his assets to charity. Buffett signed the Giving Pledge in 2006 and has so far donated more than $43 billion to the fund, including $5.3 billion in Berkshire Hathaway stock earlier this year. As a result, the Gates Foundation currently owns approximately 25 million shares, worth more than $11 billion.
Berkshire Hathaway stock represents instant diversification thanks to the company’s dozens of business interests and stock holdings — so it’s no surprise that it represents such a high percentage of the Trust’s holdings. Moreover, Berkshire is getting involved Billions of dollars in dividends Every year, it has a huge cash flow of $277 billion.
Given its diversified assets, continued increase in dividend income, and Buffett’s track record – which is unparalleled – I believe it is a wise choice to keep a lot of Berkshire Hathaway shares in the fund’s vaults.
3. Waste management: 15%
Gates is a big fan of companies with strong pricing power and strong recurring revenue, and you’d be hard-pressed to find a better example. Waste management (NYSE: WM). Simply put, society will continue to generate waste for the foreseeable future. Gates Trust owns more than 35 million shares worth $7.2 billion.
Waste Management expands beyond waste collection, recovering glass, paper, metals and plastics to redirect them to reclamation plants for recycling. The company also collects landfill gases from its sites to generate electricity, another growing source of income.
In the second quarter, revenue increased 5.5% year-over-year, while adjusted operating EBITDA (earnings before interest, taxes, depreciation and amortization) increased 10%, driven by higher payments for recyclable materials and overall price increases.
There are also profits to consider. Waste Management has been making consistent payments since 1998 and has increased its dividend for 21 consecutive years. The current yield is 1.46% and it boasts a payout ratio of just 46%, so there is plenty of room for future increases.
I don’t own Waste Management stock, but for income investors, I think it’s a smart choice.
4. Canadian National Railway: 13%
Gates and Buffett also share a passion for railroads. When Berkshire Burlington Northern bought Santa Fe in 2009, Buffett said the railroad moved freight “in a very cost-effective way… and it does so in an extraordinarily environmentally friendly way… (releases) far fewer pollutants into the atmosphere.” “. Gates clearly agrees, as the fund owns nearly 55 million shares Canadian National Railway (NYSE: CNI)With a value of approximately $6.2 billion.
Canadian National is North America’s only transcontinental railway, connecting the Atlantic Coast, Pacific Coast and Gulf of Mexico. In Buffett’s view, rail is four times more efficient than trucks, making them a more cost-effective option while also reducing greenhouse gas emissions by 75% compared to road-going trucks. There is also a strong economic moat and high barriers to entry, making rail even more attractive.
Canadian National has a consistent record of dividend payments, with increases every year since its IPO in 1995. The current dividend yield is 2.2%, and the payout ratio of 38% suggests there is plenty of room for further upside.
I don’t need to be convinced of the value that investing in Canadian National Railway provides – I’m already a shareholder.
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Danny Vina He has positions at Canadian National Railway and Microsoft. The Motley Fool has positions in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Waste Management and Canadian National Railway and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
Billionaire Bill Gates owns 81% of his $48 billion portfolio in just 4 stocks Originally published by The Motley Fool