When it comes to billionaire investors, Bill Gates is virtually a household name. He made his fortune as CEO of Microsoft (NASDAQ: MSFT), the software company he co-founded. Gates is worth an estimated $127.7 billion (at the time of writing), according to Forbes, making him the eighth richest person in the world.
After leading Microsoft for 25 years, Gates turned his attention to philanthropic ventures. He joined Warren Buffett in signing The Giving Pledge, agreeing to donate “substantially all” of his wealth to charity. To support these goals, he founded the Bill & Melinda Gates Foundation Trust “to create a world where every person has the opportunity to live a healthy, productive life.” The foundation has paid out $53.8 billion over the past 24 years, “to tackle the toughest and most important problems.”
Due to the regular inflows of Gates' wealth, dividend payments and outflows to charities, the trust's shareholdings and amounts change frequently. Although the portfolio has holdings in 20 companies in total, the vast majority are held in just four stocks.
1. Microsoft: 33%
It should come as no surprise that Microsoft stock tops the list, as Gates donates portions of his stock holdings to the trust. The Gates Foundation owns more than 38.2 million shares of Microsoft stock worth $15.45 billion.
Yet Microsoft has changed dramatically since Gates led the company. Current CEO Satya Nadella has dragged the company kicking and screaming into the 21st century, first shifting its strategy to the cloud and then quickly embracing it artificial intelligence (AI)positioning the company for future success.
To close out last year, Microsoft Azure was the world's No. 2 cloud infrastructure provider with 26% of the market and had the fastest growth among its 'Big Three' cloud rivals. While Azure grew revenue 30% year over year in the fourth quarter, Amazon Web Services (AWS) and Alphabet's Google Cloud grew by 13% and 26% respectively. Additionally, Microsoft's total cloud revenues grew 24% year over year to $33.7 billion, accounting for 54% of Microsoft's total revenues.
The company's move to generative AI created Microsoft Copilot, a suite of digital helpers deeply embedded in Microsoft products and services and designed to increase employee productivity. AI also has a halo effect on the cloud, and in the most recent quarter, six points of Azure's growth were attributed to AI services. Analysts at Evercore ISI calculate that the company's AI strategy could generate an additional $143 billion in revenue by 2027.
Microsoft has paid a dividend every year since 2004 and has consistently increased the payout over the past fourteen years. Its yield of just 0.71% is boosted by a share price that has risen 225% over the past five years – more than three times the 72% gain of the S&P500. And with a payout ratio of just 25%, there's a good chance the dividend will continue to rise in the coming years.
2. Berkshire Hathaway: 17%
Warren Buffett has promised to donate his huge mountain over time Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shares – and the rest of his wealth – to charity. Between 2006 and 2022, his contributions to the Gates Foundation Trust increased to $36 billion. Currently, the trust owns 19.9 million Berkshire shares with a stake of nearly $7.96 billion.
Rather than immediately convert the shares into cash, the foundation has chosen to hold the shares, which are backed by more than three dozen shareholdings and 67 subsidiaries. In 2023, this conglomerate generated revenues of $364 billion, up 20% year-over-year, resulting in net income of $97 billion and operating cash flow of $49 billion, a remarkable achievement considering the size of its vast assets.
The collection of insurance companies, including National Indemnity, GEICO, General Re, Berkshire Hathaway Reinsurance and Alleghany, are the crown jewels of Berkshire's holdings. The company's shareholder letter noted that these companies “performed exceptionally well over the past year, setting records for revenue, float and underwriting profits,” ultimately accounting for 40% of the company's $37 billion in operating revenues.
These factors help explain why Berkshire Hathaway remains one of Gates' largest holdings.
3. Waste management: 16%
Buffett is also a fan of boring, nondescript companies with repetitive business models – something he probably passed on to Gates. This is certainly an appropriate definition for waste collection. That's probably why the trust owns about 35.2 million shares Waste management (NYSE: WM) shares, which are currently worth more than $7.23 billion.
Trash and recycling collection is certainly not exciting, but the recurring nature of the service results in predictable revenue, which won't change anytime soon. Waste management is expanding beyond its humble roots to collect landfill gases, which are then refined and used to generate electricity or fuel waste collection vehicles.
The dividend is another attraction. Waste Management has increased its dividend for 15 years in a row and currently yields 1.4%. Waste Management uses only 49% of profits to fund the payout, leaving plenty of room for future increases.
4. Canadian National Railway: 15%
Warren Buffett has long had an affinity for railroads, something that has likely rubbed off on Gates, especially given the long association. Berkshire Hathaway counts Burlington Northern Santa Fe among its subsidiaries after Buffett bought the company for $26 billion in 2009. At the time, Buffett said that railroads not only move goods “in a very cost-effective way… they also do it in an extremely environmentally friendly way… [releasing] far fewer pollutants are released into the atmosphere.”
That same reasoning likely helped influence Gates' decision to own 54.8 million shares Canadian National Railway (NYSE: CNI) worth almost $6.97 billion.
The decision is easy to understand. Railroads are the foundation of a robust economy and transport a variety of goods, even those that are not suitable for competitive modes of travel. Railroads are also about four times more fuel efficient than trucks, resulting in fewer greenhouse gas emissions. Buffett, and therefore Gates, likes companies with broad economic boundaries and high barriers to entry – the definition of a railroad.
Canadian National also has a long dividend history, with payouts dating back to 2011. It boasts a current yield of almost 1.9% and a sustainable payout ratio of just 37%, suggesting more upside is on the horizon lie.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena has positions in Alphabet, Amazon, Canadian National Railway and Microsoft. The Motley Fool holds positions in and recommends Alphabet, Amazon, Berkshire Hathaway and Microsoft. The Motley Fool recommends Canadian National Railway and Waste Management and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has one disclosure policy.
Billionaire investor Bill Gates has 81% of his $46 billion portfolio in just four stocks was originally published by The Motley Fool
