Bill Gates’ Investment Strategy: Inside the Gates Foundation Portfolio
Many recognize Bill Gates as the co-founder of Microsoft (NASDAQ: MSFT) and a prominent philanthropist. After leading the tech giant for over 25 years, Gates shifted his focus to philanthropy. As of now, his net worth is $105.8 billion, placing him as the 14th richest person globally. His commitment to charity is clear; he aims to donate most of his wealth to support humanitarian efforts.
To achieve this mission, Gates founded the Bill & Melinda Gates Foundation Trust. “Our mission is to create a world where every person has the opportunity to live a healthy, productive life,” the foundation states. Since its inception until the end of 2023, the Trust has disbursed $77.6 billion to tackle significant global challenges.
While the Trust retains shares in around twenty-four companies, most of its holdings—81%—are concentrated in just four key stocks.
Image source: Getty Images.
1. Microsoft: 30% of Holdings
It’s no surprise that Microsoft’s stock is the Trust’s largest investment, comprising 30% of its holdings. Gates owns about 35 million shares valued at around $14.3 billion. Microsoft’s evolution has been noteworthy; it has transitioned beyond traditional software to become a leading force in cloud computing and artificial intelligence (AI).
The company’s Azure Cloud service has seen growth thanks to its AI offerings, proving essential for attracting new customers. Analysts from Evercore ISS estimate that AI services could contribute an additional $143 billion in revenue by 2027. Furthermore, Microsoft’s consistent quarterly dividend, which it has raised annually since 2011, adds to its attractiveness, despite a yield of just 0.8%. The stock has also appreciated—gaining 202% in value over the last five years—as its payout ratio remains below 25%, indicating further potential for growth.
With Microsoft’s impressive track record, it’s easy to see why Gates remains optimistic about its future. I share that belief, having invested in Microsoft myself.
2. Berkshire Hathaway: 23% of Holdings
A close friend of Gates, Warren Buffett—CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B)—also plans to donate the majority of his wealth. Since signing the “Giving Pledge” in 2006, Buffett has contributed over $43 billion, including $5.3 billion in Berkshire shares this year. The Gates Foundation now holds nearly 25 million Berkshire shares, valued at more than $11 billion.
Berkshire Hathaway’s wide range of business interests offers built-in diversification, making it a significant piece of the Trust’s portfolio. The company generates substantial dividend income, bolstered by its impressive cash reserves totaling $277 billion.
Buffett’s wise investment strategies and Berkshire’s diversified assets reinforce the decision to keep a sizeable stake in this company’s stock for the Trust.
3. Waste Management: 15% of Holdings
Gates prioritizes companies that exhibit strong pricing power and dependable revenue, making Waste Management (NYSE: WM) an ideal fit. The Trust owns over 35 million shares valued at around $7.2 billion. With waste production a persistent issue, Waste Management’s services remain indispensable.
The company is broadening its strategies, expanding its recycling efforts to include glass, paper, metals, and plastics. It is also capturing methane from landfills to produce energy, contributing to revenue growth.
In the second quarter, Waste Management reported a 5.5% increase in revenue year-over-year, with adjusted operating EBITDA up by 10%. Its consistent dividend, raised annually since 1998, currently yields 1.46% and maintains a low payout ratio of 46%, indicating room for future dividend growth.
While I don’t currently hold Waste Management shares, I believe it is a strong consideration for income-focused investors.
4. Canadian National Railway: 13% of Holdings
Both Gates and Buffett recognize the potential of railroads. After Berkshire’s acquisition of Burlington Northern Santa Fe in 2009, Buffett noted the cost-effectiveness and environmentally friendly nature of rail transport. Gates shares this belief, as the Trust owns nearly 55 million shares of Canadian National Railway (NYSE: CNI), worth approximately $6.2 billion.
As the only transcontinental railroad in North America, Canadian National connects major coastlines efficiently and with less environmental impact—railroads are known to produce 75% fewer greenhouse gases than trucks. Additionally, the high barriers to entry protect Canadian National’s market position.
The company offers reliable dividends, having increased payments every year since its 1995 IPO. Its current dividend yield stands at 2.2%, with a payout ratio of 38%, suggesting significant growth potential.
As a current shareholder, I am convinced of Canadian National Railway’s value as a solid investment.
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Danny Vena has positions in Canadian National Railway and Microsoft. The Motley Fool has positions in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Canadian National Railway and Waste Management and also recommends options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
