Why did Bill Gates own these 3 stocks for so long

Bill Gates is among the most well-known and closely followed businessmen in the world. The Microsoft The (NASDAQ:MSFT) founder has been the world’s richest person for most of the past three decades, taking the title for 16 of the last 27 years.

Consequently, it’s no surprise that so many investors continue to look at Bill Gates’ portfolio and where he invests his money and try to follow in his footsteps.

Now, it’s a well-known fact that if Bill Gates had not diversified his portfolio and instead chosen to keep his wealth entirely in Microsoft stock, he would have been much better off over the years. But diversification is generally considered a very long-term good thing, so we can’t blame him for trying to identify other world-class companies to put his capital to work over time.

Here are three of his top picks that he has held for a long time and why I think they have the potential to continue to outperform over the long term.

Key points about this article:

• Bill Gates is one of the most important investors and businessmen of all time and he continued to invest heavily in the market after his departure from Microsoft.
• Here are three of his long-term holdings that I believe investors may want to consider as core portfolio positions for long-term holding over time.
• If you’re looking for action with huge potential, be sure to grab our free copy brand new “Next NVIDIA” report.. It has a software stock where we are sure it has 10x potential.

Canadian National Railway (CNI)

A railroad worker inspecting a section of track

Canadian National Railway (NYSE:CNI) is among the largest railroad operators in North America, with more than 22,000 miles of rail from Canada to the Gulf of Mexico. One of the true beneficiaries of the economic boom we’ve seen over the past few decades, CN Rail remains a highly cyclical top pick for investors like Bill Gates looking to bet on the future health of the North American economy.

Impressive, from Q1 202440 investors held $13.53 billion in CNI stock, with the Gates Foundation Trust owning more than half of that amount ($7.22 billion). This indicates the level of conviction that Mr. Gates has him in company and the long-term prospects compared to his peers in the rail sector.

CN Rail has maintained a healthy dividend over time, with CNI shares currently yielding 2.1%. However, it is the long-term capital appreciation profile of stocks that many investors (including Bill Gates) like to see. In the last 20 years, the share price of CN Rail has appreciated more than 10 times excluding dividends. This is the type of return that investors want to see for a long-term portfolio holding.

The company’s recent results have been strong, and despite the industry’s volatility, there is much to appreciate in terms of the company’s influence for overall freight growth. The company expects growth of 11.2% this year and growth of more than 25% in fiscal 2025. So with an annual double-digit dividend growth profile, this is a stock that could continue to deliver significant returns for decades to come.

Caterpillar (CAT)

Large caterpillar equipment at a construction site

Famous for its yellow cars, Caterpillar (NYSE:CAT) has become the manufacturer of choice for heavy construction and mining equipment. Another highly cyclical pick of Mr. Gates, Caterpillar benefits from long-term spending trends in industrial activity. With a number of supporting trends gaining momentum in recent years, this company could have a nice growth profile that is undervalued by the market. And at a price-to-earnings ratio of just 15 times, I certainly think so.

Caterpillar remains the dominant global leader in the machinery sector, with its share price rising steadily over time. Growth in construction activity across a number of sectors, including mining and renewables, continues to drive strong fundamental growth for the company. In the first quarter, the company reported revenue of $15.8 billion, with its energy and transportation segment posting strong revenue growth of 6.8% year-over-year. Overall, the company’s non-GAAP EPS of $5.60 beat estimates by a significant margin and should continue to propel further share price growth over time.

That’s partly because a record $15 billion share buyback and dividend plan, but communicated by the company’s management team in the last quarter. Caterpillar is clearly one of the best companies in the market at returning capital to shareholders. Consequently, for those looking to invest like Bill Gates, this is a top option to consider in this current market.

Kraft Heinz (KHC)

Kraft boxes of macaroni and cheese on a store shelf

Kraft Heinz (NASDAQ:KHC) was formed from the 2015 merger of Kraft and Heinz. Shares of KHC initially debuted at $48.55, but are now trading below $36. Thus, there is no shortage of investors who have been dismayed by this company’s performance in recent years, and that certainly makes sense.

There are a number of reasons for this poor performance in recent years. From an SEC investigation that led to the resignation of former CEO Bernardo Hees to a dividend cut and a $15 billion write-down in 2019, the stock has been hit hard in the past. However, shares of KHC stock have stabilized in recent years, and the stock is actually up more than 22% over the past five years.

I view Kraft Heinz as a very defensive pick in this market, which is why the stock made the list. Now the company operates a capital-intensive business model, spending around $22 billion annually for operations to generate $26.5 billion in sales. However, beyond efficiency initiatives, the company continues to focus on innovation in its core product portfolio. If the company’s recent partnership deals pay off, Kraft Heinz’s management team believes $2 billion in annual recurring revenue could be added to the books.

from Kraft Heinz quarterly dividend of $0.40 per share it hasn’t risen since 2019 despite a solid 4.9% return. This lack of growth and its reputation for underperformance have kept the stock stagnant. However, the turnaround under Abrams-Rivera shows progress and a dividend increase may be on the horizon. Investors may want to act now before stocks start to gain momentum.

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