As Bill Gates is one of the richest individuals in the world, the Bill & Melinda Gates Foundation has a huge investment portfolio of nearly $42.3 billion, according to a recent 13F filing.

Investors looking for high-quality dividend growth stocks to buy for the long-term, can gain valuable insights by reviewing the holdings of successful investors like Bill Gates. 

This article will discuss 3 dividend stocks from the Bill Gates portfolio that are attractive for income investors, due to their solid dividend yields and dividend growth potential.

Bill Gates Stock #1: Microsoft Corp. (MSFT)

Not surprisingly, Microsoft is the top holding of the Bill Gates portfolio. Microsoft is a tech stock that manufactures software and hardware for businesses and consumers. Product offerings include operating systems, business software, software development tools, video games and gaming hardware, and cloud services.

In late January, Microsoft reported (1/30/24) financial results for the second quarter of fiscal 2024 (its fiscal year ends June 30th). The company accelerated its performance and grew its revenue by 18% over last year’s quarter.

Growth came from Intelligent Cloud and Productivity & Business Processes, which grew 20% and 13%, respectively. Sales of Azure, Microsoft’s high-growth cloud platform, grew 30%. Earnings-per-share grew 26%, from $2.33 to $2.93, and exceeded the analysts’ consensus by $0.16. Microsoft has exceeded the analysts’ consensus in 20 of the last 22 quarters.

Acquisitions will be a major component of Microsoft’s future growth, such as the $69 billion purchase of video game developer Activision Blizzard in 2023.

The tech giant has grown its earnings-per-share at a 16% average annual rate over the last decade. Microsoft’s cloud business is growing at a rapid pace thanks to Azure, which has been growing tremendously. The Office product range, which had been a low-growth cash cow for years, is showing strong growth rates as well after Microsoft changed its business model towards the Office 365 software-as-a-service (SaaS) system. 

MSFT has increased its dividend for 22 consecutive years. Microsoft has been a solid income investment throughout the last decade. The dividend payout ratio has never risen substantially above 50%, and the company’s strong balance sheet mean that the dividend is very safe.

Bill Gates Stock #2: Walmart Inc. (WMT) 

Walmart is the largest retailer in the world, serving more than 230 million customers each week. Revenue should be around ~$668 billion this year. 

Walmart posted fourth quarter and full-year earnings on February 20th, 2024, and results were quite strong, as well as good guidance that sent shares rising to a new high. Adjusted earnings-per-share came to $1.80, which was 15 cents ahead of expectations. Revenue was up 5.7% to $173.4 billion, which beat estimates by more than $4 billion.

The company noted global ecommerce sales soared 23% year-over-year, and the company’s burgeoning advertising business was up 33%, including 22% for Walmart Connect in the US. Comparable sales in the US rose 4% to top the estimate of 3.2%. Transactions were 4.3% higher, while average ticket was off 0.3%. Sam’s Club saw transaction growth of 3.6%, with ticket size falling slightly for total comparable sales growth of 3.1%.

Consolidated operating income was up 13.2% on an adjusted basis, positively impacted by currency and LIFO inventory adjustments of 2.3% and 1.0% respectively. Walmart sees revenue growth of 3% to 4% for this year, and offered up guidance that sees us estimating $2.35 in earnings-per-share.

We are forecasting 8% annual earnings growth for the next five years as Walmart continues to work through its margin issues and caution on consumer spending. The company continues to buy back stock as well. We see low single-digit sales growth each year, with its e-commerce business being the primary driver of top line growth. 

Walmart approved a dividend of 83 cents per share for this year, a 9% increase over the prior year dividend of 76 cents. Walmart has increased its dividend for 51 consecutive years, making it a member of the Dividend Kings.

Bill Gates Stock #3: Waste Management (WM)

Waste Management is North America’s leading provider of environmental solutions. The company provides waste collection, transfer, recycling, and disposal services to a diverse customer lineup including residential, commercial, industrial, and municipal customers. The company also owns and operates landfill gas-to-energy facilities in the U.S. 

In February 2024, Waste Management raised its dividend to $3.00 annually, which marks its 21st consecutive annual increase. On February 12th, 2024, Waste Management reported fourth quarter 2023 results. For the quarter, the company generated revenue of $5.2 billion, a 5.7% increase compared to Q4 2022. Adjusted net income equaled $703 million or $1.74 per share compared to $537 million or $1.30 per share in Q4 2022. 

Collection and disposal volumes rose by 1.1% in fourth quarter. During the quarter, Waste Management repurchased $312 million of common stock. The company also returned $281 million to shareholders in the form of cash dividends. 

Waste Management expects 2024 revenue to grow 6% to 7%, with collection and disposal volume growth of 1%. The company also expects to repurchase $1 billion of its shares in the year.

Waste Management operates in an industry dominated by only a few competitors, which lends the company pricing power. It also has the opportunity to grow through higher volumes, due to population growth and new customer additions. Thanks to the consistency of its business model and industry leadership position, Waste Management has the ability to retain key customers while attracting new customers.

Waste Management scores well in terms of safety and quality. The company enjoys a wide economic “moat,” in that it provides a necessary service, and it is the largest operator in an industry that is highly regulated. The company should also perform reasonably well in the next recession, as people still require waste disposal services in good times or bad.