Inspiration for investors: three long-term investment bets of Bill Gates
Bill Gates is one of the most well-known figures in business and investing. The founder of Microsoft regularly appears among the world's richest people, not only because of the success of his technology company, but also because of his long-term and thoughtful investing.
After leaving Microsoft's leadership, Gates focused on diversifying his portfolio, which brought him further success. Let's take a look at three of his long-term investment bets that are worth considering.
Canadian National Railway $CNI
Canadian National Railway (CNI) is one of the most prominent rail operators in North America. It manages more than 22,000 kilometers of track from Canada to the Gulf of Mexico and benefits from the region's long-term economic growth. Gates, through his foundation, owns more than half of the $13.53 billion invested in the company. The railroad giant has earned his trust through long-term capital growth and a steady dividend, which currently stands at 2.1%.
Over the past 20 years, CN Rail's share value has increased more than tenfold, making it a very attractive long-term investment. The company projects growth of 11.2% this year and more than 25% in 2025. Given the dividend growth and robust financial performance, this is one of the best investments focused on infrastructure and transportation.
Caterpillar $CAT
Caterpillar is a globally known manufacturer of heavy construction and mining equipment. The company is benefiting from the growing industrial and construction boom, especially due to the increase in demand for infrastructure projects and mining activities. Caterpillar shares are trading with a price-to-earnings ratio of 16, suggesting that the market may be underestimating its potential.
In the first quarter of 2024, the company generated revenues of $15.8 billion, and its earnings beat market expectations. The company plans to continue to grow through share buybacks and dividend increases, making it an attractive option for investors seeking a return on capital. This makes Caterpillar one of Bill Gates' other favorite long-term investments.
Kraft Heinz $KHC
Kraft Heinz is the result of a merger between two giants in 2015, but its stock has had a tough time since then. Losses due to poor management, dividend cuts, and one-time write-downs have negatively impacted its stock market value. Still, the stock has stabilized in recent years, rising more than 24% over the past five years.
Kraft Heinz now operates as a stable defensive investment that focuses on innovation and efficiency improvements. The company expects to add $2 billion to its annual sales through new partnerships and product innovations. Although the dividend remains at $0.40 per share as of 2019, the 4.6% yield makes it a solid choice for conservative investors looking for long-term stability and potential growth.
Disclaimer: You'll find plenty of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always conduct a thorough analysis of your own.
Source: Yahoo, CNN, 247wallst.com.