Bill Gates is using these dividend stocks to generate a giant inflation-fighting income stream ⁠— you might want to do the same

·4 min read
Bill Gates is using these dividend stocks to generate a giant inflation-fighting income stream ⁠— you might want to do the same
Bill Gates is using these dividend stocks to generate a giant inflation-fighting income stream ⁠— you might want to do the same

With elite investors like Michael Burry and Jeremy Grantham predicting a reckoning for today’s overheated stock market, it might be time to look at dividend stocks.

Dividend stocks are a way to diversify a portfolio that may be chasing growth a little too obsessively. They generate income in good times, bad times and, particularly important today, times of high inflation.

They also tend to outdo the S&P 500 over the long run.

One prominent portfolio that’s heavy on dividend stocks belongs to The Bill & Melinda Gates Foundation Trust. With the trust being used to pay for so many initiatives, income needs to keep flowing into it.

Dividend stocks help make this happen.

Here are three dividend stocks that occupy significant space in the foundation’s holdings. You may even be able to follow in its footsteps with some of your spare change.

Waste Management (WM)

Waste Management Inc, is an American waste management, & environmental services company in North America, founded in 1968
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It’s not the most glamorous of industries, but waste management is an essential one.

No matter what happens with the economy, municipalities have little choice but to pay companies to get rid of our mountains of garbage, even if those costs increase.

As one of the biggest players in the space, Waste Management remains in an entrenched position.

The shares have more than doubled over the past five years and are up about 42% year to date. Management is projecting 15% revenue growth this year.

Currently offering a yield of 1.4%, Waste Management’s dividend has increased 18 years in a row.

The company has paid out almost $1 billion in dividends over the last year, and its roughly $2.5 billion in free cash flow for 2021 means investors shouldn’t have to worry about receiving their checks.

Caterpillar (CAT)

Modern hydraulic excavator on a field work site where an excavation works is performed in Kuala Lumpur, Malaysia.
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As a company whose fortunes typically follow that of the larger economy — that’ll happen when your equipment is a fixture on building sites the world over — Caterpillar is in an intriguing post-pandemic position.

The company’s revenues are feeling the effects of a paralyzed global supply chain, but still-historically low interest rates and President Joe Biden’s recently passed $1.2 trillion infrastructure bill mean there could be an awful lot of building going on in the U.S. in the near future.

Caterpillar’s mining and energy businesses also provide exposure to commodities, which tend to do well during times of high inflation.

The company’s stock has ridden higher raw material and petroleum prices to an almost 15% increase this year.

After announcing an 8% increase in June, Caterpillar’s quarterly dividend is currently at $1.11 per share and offers a yield of 2.2%. The company has increased its annual dividend 27 years straight.

Walmart (WMT)

People shopping at a Walmart store in south San Francisco bay area
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With grocery stores deemed essential businesses, Walmart was able to keep its more than 1,700 stores in the U.S. open throughout the pandemic.

Not only has the company increased both profits and market share since COVID coughed its way across the planet, but its reputation as a low-cost haven makes Walmart many consumers’ go-to retailer when prices are rising.

Walmart has steadily increased its dividends over the past 45 years. Its annual payout is currently $2.20 per share, translating into a dividend yield of 1.6%.

After trending slightly downward over the past month, Walmart currently trades at roughly $136 per share. If that's still too steep, you can get a smaller piece of the company using a popular app that lets you to buy fractions of shares with as much money as you are willing to spend.

Look beyond the stock market

Aerial side view head of cargo ship carrying container and running near international sea port for export.
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At the end of the day, stocks are inherently volatile — even those that provide dividends. And not everyone feels comfortable holding assets that swing wildly every week.

If you want to invest in something that has little correlation with the ups and downs of the stock market, take a look at some unique alternative assets.

Traditionally, investing in fine art or commercial real estate or even marine finance have only been options for the ultra rich, like Gates.

But with the help of new platforms, these kinds of opportunities are now available to retail investors, too.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.