Bill Gates’ 16 Dividend Stocks To Buy
In this article, we will take a detailed look at Bill Gates' 16 Dividend Stocks To Buy. For a quick overview of such stocks, read our article Bill Gates' 5 Dividend Stocks To Buy.
The era of low interest rates did not bode well for dividend investing as investors preferred to pile into growth stocks instead of dividend-paying equities. Especially after the 2008 financial crisis ended, dividend stocks' contribution to overall market returns declined. A Wall Street Journal report said that US stocks with dividend yields above 5% returned 450% since the end of 2008, compared the 640% gain posted by the broader S&P Composite 1500. On the other hand, companies that do not pay dividends have posted gains of about 1500%. But since the Federal Reserve started increasing interest rates and speculation of a "higher for longer" scenario becomes relevant, investors are starting to pay attention to dividend stocks.
The WSJ report also quoted Daniel Peris, the portfolio manager at investment banking company Federated Hermes, who said in his book “The Ownership Dividend" that the trend in which dividend stocks lost their mojo amid low interest rates was temporary as he believes the pendulum is about to swing in the favor of dividend stocks.
But does all dividend stocks worth your attention? As you will see in this article, smart investors and billionaires prefer high-quality dividend stocks with low volatility and strong businesses. The WSJ report said investing in dividend stocks with low volatility has outperformed other notable investment strategies about 60% of the time since 1998.
Methodology
For this article we scanned the Q4'2023 portfolio of Bill & Melinda Gates Foundation Trust and chose its top dividend stocks picks. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
16. Hormel Foods Corp (NYSE:HRL)
Bill Gates' Stake: $70,490,762
With a dividend yield of about 3.7%, Hormel Foods Corp (NYSE:HRL) ranks 16th in our list of the top dividend stocks in Bill Gates' portfolio as of the end of 2023.
Bill & Melinda Gates Foundation owns a $70 million stake in Hormel Foods Corp (NYSE:HRL).
15. Danaher Corp (NYSE:DHR)
Bill Gates' Stake: $86,289,820
Earlier this month Danaher Corp (NYSE:DHR) increased its dividend by a whopping 12.5%.
As of the end of the fourth quarter of 2023, 90 hedge funds out of the 933 funds in Insider Monkey's database had stakes in Danaher Corp (NYSE:DHR). The most notable stake in Danaher Corp (NYSE:DHR) is owned by Ken Fisher's Fisher Asset Management which owns a $978 million stake in Danaher Corp (NYSE:DHR).
Headwaters Capital Management stated the following regarding Danaher Corporation (NYSE:DHR) in its fourth quarter 2023 investor letter:
“Danaher Corporation’s (NYSE:DHR) acquisition offer for ABCM was approved by shareholders on 11/6/23. Shareholders approved the deal based on trough fundamentals (potential China weakness) and trough valuation (the broader market bottomed on 10/27). DHR took advantage of broader market fears and mis-aligned management incentives to acquire Abcam at a cheap price. While disappointing, ABCM was still a very successful investment for Headwaters as it outperformed the market by +27% during our ownership. The cash received from the acquisition was immediately re-deployed into the newest addition to the portfolio, IPAR (discussed below).”
14. Kraft Heinz Co (NASDAQ:KHC)
Bill Gates' Stake: $96,983,748
With a 4.4% dividend yield and a recession-proof business, American food company Kraft Heinz Co (NASDAQ:KHC) ranks 14th in our list of the best dividend stocks according to Bill Gates. Bill & Melinda Gates Foundation owns a $97 million stake in Kraft Heinz Co (NASDAQ:KHC).
As of the end of the fourth quarter of 2023, 44 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Kraft Heinz Co (NASDAQ:KHC).
13. Anheuser-Busch Inbev SA (NYSE:BUD)
Bill Gates' Stake: $110,047,860
Anheuser-Busch Inbev SA (NYSE:BUD) is in the spotlight for two reasons. First, data from Nielsen has shown that the Bud Light brand saw improvement in sales during the one-month period ending January 27. Second, Donald Trump has called on his supporters to give Anheuser-Busch Inbev SA (NYSE:BUD) a "second chance" and called Anheuser-Busch Inbev SA (NYSE:BUD) a "Great American Brand." Trump was referring to the backlash Anheuser-Busch Inbev SA (NYSE:BUD) received from conservatives in the US after its collaboration with transgender TikTok star Dylan Mulvaney.
As of the end of the fourth quarter of 2023, Bill Gates' foundation owns a $110 million stake in Anheuser-Busch Inbev SA (NYSE:BUD).
12. United Parcel Service, Inc. (NYSE:UPS)
Bill Gates' Stake: $118,722,643
United Parcel Service, Inc. (NYSE:UPS) ranks 12th in our list of the best dividend stocks in Bill Gates' 2024 portfolio. Last month, UPS declared a 0.6% increase in its prior dividend. Forward dividend yield came in at over 4%.
A total of 46 hedge funds out of the 933 funds in Insider Monkey's database had stakes in United Parcel Service, Inc. (NYSE:UPS). Bill & Melinda Gates Foundation owns a $119 million stake in United Parcel Service, Inc. (NYSE:UPS).
ClearBridge Large Cap Value Strategy made the following comment about United Parcel Service, Inc. (NYSE:UPS) in its Q3 2023 investor letter:
“A higher-for-longer rate mentality taking hold was a headwind for economically sensitive stocks. Rising wages have been one of the main drivers of inflation, and this has proved to be a sticky area, keeping the Fed’s attention and weighing on share prices. For example, United Parcel Service, Inc. (NYSE:UPS) renegotiated a wage increase for its union-backed workforce this summer, which weighed on margins that were already being constricted by slowing volumes. While the new union deal will dampen profits over the next 12 months due to the front-end-loaded nature of the new five-year contract, management gained increased flexibility to deploy automation, which we think should further enhance UPS’s strong competitive position and provide a long-term tailwind to profitability.”
11. Crown Castle Inc (NYSE:CCI)
Bill Gates' Stake: $163,578,094
Telecom infrastructure REIT Crown Castle Inc (NYSE:CCI) is a high-yield dividend stock in Bill Gates' Q4 portfolio. The stock has a dividend yield of over 5.5%.
The stock is making waves after Crown Castle Inc's (NYSE:CCI) founder Ted Miller nominated four people for board director positions and outlined a restructuring plan that includes selling off its fiber assets.
Carillon Eagle Growth & Income Fund made the following comment about Crown Castle Inc. (NYSE:CCI) in its Q2 2023 investor letter:
“Crown Castle Inc. (NYSE:CCI) detracted from performance as telecom companies have temporarily slowed their deployment of additional cellular spectrum. This slowdown could impair future growth for cell tower companies.”
10. Waste Connections Inc (NYSE:WCN)
Bill Gates' Stake: $320,807,352
Canadian-based Waste Connections Inc (NYSE:WCN) is a low-yield dividend stock in Bill Gates' portfolio. Earlier this month Waste Connections Inc (NYSE:WCN) posted fourth quarter results. Adjusted EPS in the quarter came in at $1.11, beating estimates by $0.02. Revenue in the quarter jumped 9.1% year over year to $2.04 billion.
Bill & Melinda Gates Foundation owns a $321 million stake in Waste Connections Inc (NYSE:WCN).
TimesSquare Capital U.S. FOCUS Growth Strategy made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2023 investor letter:
“Waste Connections, Inc. (NYSE:WCN), a non-hazardous waste company, pulled back by -6%. They serve residential, commercial, municipal, and industrial customers in the U.S. and Canada. Second quarter results included inline revenues, an upside to profits on better margins, though with slightly lower volumes. Management noted that volumes came in weaker than anticipated due to intentionally shedding low margin contracts. Forward revenue guidance was lowered slightly, reflecting lower surcharges from falling diesel prices.”
9. FedEx Corp (NYSE:FDX)
Bill Gates' Stake: $388,147,555
FedEx Corp (NYSE:FDX) has a dividend yield of over 2% as of February 24. Bill & Melinda Gates Foundation owns a $388 million stake in FedEx Corp (NYSE:FDX). This fund is the biggest hedge fund stakeholder in FedEx Corp (NYSE:FDX) out of the 70 funds that had stakes in FedEx Corp (NYSE:FDX) as of the end of the fourth quarter of 2023.
The London Company Large Cap Strategy stated the following regarding FedEx Corporation (NYSE:FDX) in its fourth quarter 2023 investor letter:
“FedEx Corporation (NYSE:FDX) – After a very positive start to the year, FDX lagged during 4Q after a weak earnings report and lowered guidance. Fundamentals improved throughout the year as FDX enacted major cost cuts, but a decline in volumes in the quarter was too much for the new cost structure to overcome. Longer term, FDX has the potential to be a strong player in the transportation industry, but it will have to continue adjusting its fleet and network to an evolving marketplace.”
8. Walmart Inc (NYSE:WMT)
Bill Gates' Stake: $477,704,566
Walmart Inc (NYSE:WMT) recently increased its annual dividend by 9%. This marked the 51st consecutive year of dividend increases from Walmart Inc (NYSE:WMT).
As of the end of the fourth quarter of 2023, 85 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Walmart Inc (NYSE:WMT).
7. Coca-Cola Femsa SAB de CV (NYSE:KOF)
Bill Gates' Stake: $588,161,006
The Mexican arm of Coca Cola, Coca-Cola Femsa SAB de CV (NYSE:KOF), ranks seventh in our list of the top dividend stocks in Bill Gates' portfolio. The Bill & Melinda Gates Foundation had a $478 million stake in Coca-Cola Femsa SAB de CV (NYSE:KOF).
Hayden Capital made the following comment about The Coca-Cola Company (NYSE:KO) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, heathier beverage brands.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
6. Ecolab Inc (NYSE:ECL)
Bill Gates' Stake: $1,034,999,027
Water treatment and cleaning solutions company Ecolab Inc (NYSE:ECL) is one of the top performers in Bill Gates' portfolio, with the stock up 40% over the past one year. It has a dividend yield of just over 1% as of February 24. The Bill & Melinda Gates Foundation has a $1 billion stake in Ecolab Inc (NYSE:ECL).
Earlier this month Ecolab Inc (NYSE:ECL) posted Q4 results. Adjusted EPS in the fourth quarter came in at $1.55, beating estimates by $0.01. Revenue in the quarter jumped 7% year over year to $3.9 billion, missing estimates by $40 million.
Mairs & Power Growth Fund stated the following regarding Ecolab Inc. (NYSE:ECL) in its fourth quarter 2023 investor letter:
“All of our Materials holdings—Ecolab Inc. (NYSE:ECL), HB Fuller (FUL), and Sherwin Williams (SHW)—also posted strong results in 2023, a stark reversal from the prior year. After oil prices spiked above $100 in 2022 due to the Ukraine-Russia Conflict, oil has since pulled back to the low $70s. Oil and its by-products are major inputs for all of our Materials holdings; as such, lower oil prices have led to a rebound in profits. For example, our largest Materials holding—Ecolab—is expected to increase earnings more than 15% this year after declining 5% last year.”
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Disclosure: None. Bill Gates' 16 Dividend Stocks To Buy is originally published on Insider Monkey.
