Do billionaires like dividend stocks? Absolutely. Take a look at the holdings of famous billionaire investors such as Warren Buffett and Ken Griffin. Full of dividend stocks.
Bill Gates stands out as another great example. Although he doesn't run a publicly traded company or hedge fund like Buffett or Griffin, he has donated large sums of money to the Bill & Melinda Gates Foundation Trust. And more than half of the philanthropic foundation's $42 billion portfolio is invested in these three dividend stocks.
1.Microsoft
it's not surprising microsoft (MSFT -0.71%) Gates' favorite stocks remain. After all, he co-founded a technology company with Paul Allen and led it for many years. Microsoft is by far the Gates Foundation Trust's top holding, accounting for 33.98% of its total portfolio at the end of 2023.
Many technology companies don't pay dividends, but Microsoft is an exception. The company launched its dividend program in 2003. Over the past decade, Microsoft has increased its dividend by nearly 168%. However, the dividend yield is still only 0.74%.
One of the main reasons the yield is so low is because Microsoft's stock price is so high. The stock has been a 10-bagger in the past 10 years and is up almost 60% in the past 12 months.
2. Canadian National Railways
The Gates Foundation isn't just betting on tech stocks like Microsoft. canadian national railway (CNI -0.26%) accounts for nearly 16.3% of the total portfolio, making it the third largest holding.
Canadian National Railways is not just limited to Canada. There are about 20,000 miles of railroads in the central United States that transport products. In addition to railway operations, the company also provides transportation and logistics services.
The shipping company has increased its dividend for 28 consecutive years, most recently raising its dividend by 7% in the first quarter of 2024. The current dividend yield is 1.94%.
3. Caterpillar
caterpillar (Cat -0.30%) It is the Gates Foundation's fifth largest position. It accounts for 5.14% of the total portfolio. This brings the total weight of these three dividend stocks to his 55.41%.
The Gates Foundation has owned Caterpillar since the fourth quarter of 2005. But the last time he added equipment maker stock was in the fourth quarter of 2013. The most recent transaction involving Caterpillar occurred in the first quarter of 2022 and resulted in a sale of approx. 24% of the foundation's shares in the company.
Caterpillar has provided the Gates Foundation with impressive dividend income over the years. The company has paid a quarterly dividend since 1933 and has increased its dividend for 29 consecutive years. The current dividend yield is 1.55%.
Are Bill Gates' top dividend stocks a wise choice for other investors?
It's not a good idea to buy a stock just because a billionaire investor owns it. First, the factors that influenced billionaires when they first bought stocks may have changed over time.
In my opinion, there are many other stocks that offer more attractive dividends for income investors than Microsoft, Canadian National Railways, and Caterpillar. Value investors can also find better options.
Are any of these stocks good for growth-minded investors? You can exclude Canadian National Railways and Caterpillar from your list. However, Microsoft should have significant growth prospects, thanks in large part to the increased adoption of generative AI. However, the company's stock price has significant growth built into it, with a forward P/E of more than 31 times. Still, I think Microsoft is still worth considering for long-term growth investors.
Keith Speights has a position at Microsoft. The Motley Fool has a role in and recommends Microsoft. The Motley Fool recommends Canadian National Railways and recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
