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In this article, we will discuss Bill Gates' stock portfolio strategy and extensively review his top 10 high dividend stocks. You can skip our comprehensive analysis of Bill Gates' history and his hedge fund performance and see Bill Gates' Top 5 High Dividend Stocks.
The world’s fourth-richest person and Microsoft Corporation founder Bill Gates have invested billions of dollars in stocks to support his charitable activities through Bill & Melinda Gates Foundation Trust, the world's largest private charitable foundation. Last year, Gates announced retirement from the Microsoft board to devote his time to charitable activities related to health, climate change, and education. The Foundation’s stock portfolio is valued at around $22 billion and it’s a tax-free entity. The portfolio has been managed by the team analysts led by portfolio manager Michael Larson. Gate’s foundation doesn’t invest money in risky high-growth stocks. Instead, the foundation's portfolio manager invests money in companies that have a well-established business model with a strong track record of returning steady returns to investors.
Founded in 2000, Gates' foundation is running a concentrated portfolio strategy, with the top ten stocks representing close to 96% of the overall 13F portfolio. Only two out of the top ten stock positions don’t offer dividends. Meanwhile, growth stocks like Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Twitter, Inc. (NYSE: TWTR), and Alphabet Inc. (NASDAQ: GOOG) are also a member of Gate’s portfolio, but these positions account for only a small percentage of the 13F portfolio. Berkshire Hathaway Inc. (NYSE: BRK-A) is the largest stock holding of the Bill & Melinda Gates Foundation Trust portfolio, representing 43% of the $22 billion worth of stock portfolio at the end of the December quarter.
In a recent interview on CNBC, Bill Gates highlighted his concerns over the SPAC bubble. He said that people should do what he’s doing and only chase high-quality SPACs. He is an early backer of QuantumScape, a special purpose acquisition company. Gates is investing in companies that are working to reduce global carbon emissions. Gates’ Breakthrough Energy Ventures has also been investing millions of dollars in ZeroAvia, the developer of hybrid hydrogen-electric powertrain for aircraft. However, Gates is also worried about the market flip from the environment in which companies are not waiting to go public.
Bill Gates is the largest donor of Bill & Melinda Gates Foundation Trust. He dedicated$35.8 billion worth of Microsoft stock to the Gates Foundation. Warren Buffett is also among the biggest donors of the Gates Foundation. In 2006, the legendary value investor has donated 10 million shares of his investment holding to the Gates foundation.
Gate’s portfolio managers held a position in 21 stocks at the end of the December quarter. The Foundation slashed its stake in Apple, Alphabet, and Amazon to capitalize on the 2020 bull run and sold out stakes in risky companies like Alibaba Group Holding Limited (NYSE: BABA) – which is struggling due to regulatory issues and the US-China trade war. Besides a 43.1% stake in Berkshire, the firm has spread investments across several sectors including consumer staples, industrials, transportation, utilities, materials, and information technology.
While Bill Gates’ reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start reviewing Bill Gates' top 10 high dividend stocks.
Top 10 High Dividend Stocks According to Billionaire Bill Gates
10. Apple Inc. (NASDAQ: AAPL)
Gates foundation's portfolio managers' strategy of buying a big stake in the world's largest tech giant Apple (NASDAQ: AAPL) early last year generated big gains for the foundation. They, however, sold half of Apple's position at the end of 2020 to capitalize on its substantial share price gains. Apple stock price soared more than 85% during the pandemic year. Besides share price gains, Apple offers lofty cash returns in the form of dividends. The tech giant raised dividends in the past eight straight years, with an average dividend growth rate of 9.5% in the past five years.
Stewart Asset Management, an investment management firm, highlighted a few stocks including Apple in an investor letter:
“To fund a new investment, we sold the portfolio’s holding of Apple. We did so reluctantly. Apple is a superb global franchise with a loyal following and growing service businesses that are creating a recurring revenue stream. The shares however have appreciated rapidly in the last two years. The valuation is now well ahead of our estimates for earnings growth, which we believe will trend below the 11% or so threshold we look for in our investments.”
9. Ecolab Inc. (NYSE: ECL)
The specialty chemical company Ecolab Inc. (NYSE: ECL) is a dependable dividend stock. Its dividend growth history is spanning over 28 years. It currently offers a quarterly dividend of $0.40 per share, yielding around 0.86%. Ecolab is among Bill Gates’ top 10 high dividend stocks. Gates' trust portfolio has been holding a stake in ECL since 2010. At the end of the December quarter, Gates held 4.3 million shares of ECL, accounting for 4.23% of the 13F portfolio.
Ecolab Inc. was in 45 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to 52 positions in the previous quarter.
8. FedEx Corporation (NYSE: FDX)
Courier service FedEx Corporation (NYSE: FDX) is a member of Bill Gates' top 10 high dividend stocks list. Gates held 3 million shares of FedEx at the end of December, accounting for 3.52% of the overall portfolio. Its average dividend growth rate stood around 21% in the last five years. The company currently offers a quarterly dividend of $0.65 per share, yielding around 0.90%.
Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, mentioned a few stocks including FedEx Corporation in the Q4 investor letter. Here is what Longleaf Partners Fund said:
“FedEx (76%, 3.69%; 3%, 0.29%), the global logistics company, was the top contributor in 2020 after an outstanding year for the business that wasn’t simply the result of COVID, even if the company has been a strong beneficiary of the rapid societal changes driven by it. The share price returned over 85% in the last six months. Over the last quarter, Ground revenues increased 38%, while operating income grew 61%, despite another round of heavy investments weighing down margins temporarily into the single digits. The company is indispensable for the United States’ e-commerce deliveries and is reaping the rewards of its investments in previous years to gear up for 7-day delivery.”
7. Canadian National Railway Company (NYSE: CNI)
Bill & Melinda Gates Foundation Trust held 16.97 million shares of Canadian National Railway Company (NYSE: CNI) at the end of the December quarter. It is the fourth largest stock holding of Gates’ stock portfolio, weighted around 8.35%. The company offers a quarterly dividend of $0.49 per share, yielding around 1.15%. The company paid dividends every year over the past 25 years. In addition to dividends, its share price rallied almost 52% in the last twelve months.
The number of hedge fund positions increased to 31 in the December quarter compared to 26 positions in the previous quarter.
6. Walmart Inc. (NYSE: WMT)
With 47 years of dividend growth history, Walmart Inc. (NYSE: WMT) is a perfect stock for a dividend portfolio. Its quarterly dividend of $0.55 per share is yielding around 1.50%. Bill & Melinda Gates Foundation Trust first initiated a position in WMT in 2006. Gates held 11.6 million shares of Walmart at the end of the fourth quarter, accounting for 7.49%.
Walmart Inc. investors should be aware of an increase in hedge fund sentiment of late. It was in 70 hedge funds’ portfolios at the end of December compared to 69 positions in the previous quarter.
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Disclosure: None. Bill Gates' Top 10 High Dividend Stocks is originally published on Insider Monkey.