Gates safeguards his investments, utilizing these specific shares, in anticipation of upward movement in interest rates.
Here Comes the Unpredictable Ride: Inflation and Soaring Interest Rates Fuel Financial Anxiety by Jenna Sharp
The Federal Reserve (Fed) sent shockwaves through the financial world once again, hiking interest rates by 0.75 percentage points. The sudden increase is a direct response to skyrocketing inflation, which currently lingers around 8.2%. Fed Chair Jerome Powell made it clear that it could take some time to bring inflation down to the sought-after 2% target, casting a cloud over the stock market's future stability.
With economic uncertainty at an all-time high, investors are on the hunt for dependable stocks to safeguard their portfolios. Looking at the investment choices of one of the wealthiest individuals in the world, Bill Gates, provides some helpful insights. After all, the Bill & Melinda Gates Foundation Trust manages the foundation's considerable assets and finance its initiatives. So, when the market is in a turmoil, Gates' portfolio stirs curiosity among those seeking solid returns.
In these volatile times, Gates' portfolio reveals two reliable candidates that investors should consider adding: Waste Management and Walmart.
Junk's Got Value: Waste Management
Over 16% of Gates' portfolio is allocated to Waste Management, the largest private waste management company in the U.S. This company operates numerous recycling facilities and landfills. Despite economic conditions, people will always generate waste, which needs proper disposal. Waste Management's successful business model is reflected in the dividend, which has increased year-over-year for 19 consecutive years, distributed almost a billion dollars in dividends last year. A high free cash flow of $2.5 billion in 2021 ensures that dividend payouts will continue in the future. Waste Management's stock has appreciated by 12% this year and boasts a five-year return of approximately 125%. The company projects a 10% revenue increase this year.
Forever Feeding the World: Walmart
Walmart, the world's largest revenue-generating company according to Fortune Global 500, clocks in at over 2% of Gates' portfolio. Walmart is a formidable dividend powerhouse, increasing its dividend for 49 years straight, with a current yield of 1.81%. In periods of inflation, consumers appreciate Walmart's low-cost food options. The earnings per share could reach $4.93 (up from $4.81 last year) this year. Walmart's stock is already up 13% this year.
With stable returns, Waste Management and Walmart could bring substantial returns to Gates' portfolio this year. As turbulent economic times persist, these two stocks serve as a beacon of hope in the chaotic market.
Interestingly, stocks such as Walmart are also components of the BÖRSE ONLINE Immortal Stocks Index. The index aims to invest in halt-and-hold stocks for eternal wealth accumulation. The BÖRSE ONLINE editorial team has curated 30 such stocks in the Imperishable Stocks Index, focusing on companies that are likely to remain successful on the market for over a century due to their exceptional business models.
Conflict of Interest Disclosure: The price of the financial instruments is derived from an index developed by Börsenmedien AG, which holds the rights to it. Börsenmedien AG has a cooperation agreement with the issuer of the displayed securities, granting the issuer a license to use the index. In this context, Börsenmedien AG receives remuneration from the issuer.
Digging a little deeper, the Immortal Stocks Index prioritizes crisis-resilient stocks for long-term wealth creation[1]. The index's constitutents beyond Waste Management and Walmart are not explicitly mentioned in the available data. However, we can infer a few likely candidates from the index's methodology and related content[1][4]:
- Blue-chip diversity: Potential selections may include tech titans such as Apple and Microsoft, given their strong cash flows and market dominance[4].
- Sector resilience: Companies in the healthcare, consumer staples, and infrastructure sectors are often prioritized during inflationary periods, although specific names are not explicitly listed here[1].
- Dividend payers: Firms with consistent dividend growth and pricing power, like the 3M Company, might fit the index's objectives[2].
For precise index components, consult Börse ONLINE's official resources as the provided data does not include all holdings[1][2]. For inflation-resistant alternatives, the Vanguard S&P 500 UCITS ETF, which offers broad exposure to large-cap U.S. equities, including Apple and Microsoft, might serve as an option[4]. Additionally, European stalwarts may also be included in the index, but the available sources mainly emphasize U.S. large caps[1][4]. Consult the index provider's documentation or regulatory filings for definitive holdings.
- The Federal Reserve's interest rate hike, intended to combat inflation, has sparked interest in reliable investments, with many looking to Bill Gates' portfolio for guidance.
- Among Gates' investments, Waste Management stands out as a valuable addition for volatile times, boasting a dividend that has increased year-over-year for 19 consecutive years.
- Walmart, another significant investment for Gates, is a dividend powerhouse, with a straight 49-year record of dividend increases and a projected earnings per share growth this year.
- The BÖRSE ONLINE Immortal Stocks Index, which invests in stocks expected to remain successful for over a century, includes companies like Walmart and Waste Management, providing a beacon of hope in challenging market conditions.
