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Top Dividend Stocks from Bill Gates

December 21, 2011 | About:
Mara Kohn

Mara Kohn

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Bill Gates is chairman of Microsoft Corporation (MSFT), the worldwide leader in software, services and solutions. He discovered his interest in software when he was a child and started programming computers with only 13 years old. Then he went to Harvard University where he developed a version of the programming language BASIC for the first microcomputer, the MITS Altair.

Gates left Harvard to devote his energies to Microsoft, a company he had begun in 1975 with his childhood friend Paul Allen. At that time he already believed that the computer would be a valuable tool on every office desktop and in every home, so they began developing software for personal computers.

In addition Gates founded Corbis, which is developing one of the world's largest resources of visual information - a comprehensive digital archive of art and photography from public and private collections around the globe.

Bill Gates is considered one of the smartest businessmen in the world.

Here are some of his top picks:

Waste Management Inc. (WM): Waste Management is the largest integrated waste services provider in the U.S., operating 271 active landfills and 294 transfer stations. Apart from its core collections and disposal business, the company's Wheelabrator segment operates 22 waste-to-energy plants that produce renewable energy.

The company recorded an increase of 15% in EPS to $0.63 in the third quarter. Revenues increased 9% to $3.52 billion. Waste Management s recent Oakleaf acquisition is expected to generate a minimum of $80 million in EBITDA on an annualized basis. It is considered an interesting opportunity to enhance profits. Furthermore, the company has increased its dividend for the past seven consecutive years and, backed by its strong cash flow.

This strong cash flow broadens the opportunity to invest in technology that will help the firm keep up with the evolving ton of trash, which will provide its customers with a portfolio of solutions that can address the entire waste stream.

BP PLC (BP): This London-based company is an integrated oil and gas firm with operations across six continents. It is considered one of the main oily super-majors with 63% of production coming from oil.

Its new strategy of active portfolio management, higher exploration activity with additional precautionary actions as well as refining and marketing repositioning is expected to create value for shareholders. The company expects its production for the next quarter to be higher after the peak turnaround season.

M&T Bank Corp. : M&T Bank is one of the 20 largest banks in the U.S., with branches in New York, Pennsylvania, West Virginia, Virginia, Maryland, Delaware, and New Jersey. The bank was founded to serve manufacturing and trading businesses around the Erie Canal.

M&T is in good financial health. M&T's tangible common equity/asset ratio was 10.7% as of June, 2011, and the company is still paying a $0.70-per-share quarterly dividend. The company's capital levels, earnings power, and its ability to reduce dividend payments minimize the possibility of a capital shortfall.

With insiders owning a large portion of equity, there is an alignment between management´s interest and outside shareholders´.

Republic Services Inc A (RSG): Republic Services, Inc. is a leading provider of services in the domestic non-hazardous solid waste industry. They provide non-hazardous solid waste collection services for commercial, industrial, municipal and residential customers through their collection companies. They also own or operate transfer stations and solid waste landfills.

The company´s EPS increased 18% to $0.53 and revenues increased 3% to $2.12 billion in the third quarter of fiscal 2011. In addition, Republic Services has secured a number of new contracts with the expectation to improve its performance in 2012.

During the quarter, the company reported a 2.5% increase in internal top-line growth, the highest since 2008. The company is also undergoing volume expansion in the collection lines of business. Indeed, collection volumes are expected to improve further.

Republic's business should rise with the improvement in the general economy as pricing and volumes return to normalized levels. Republic's newly expanded landfill base should continue to generate profit expansion as the company strengthens its position as an authentic tollbooth in the waste stream.

Additional volumes can be generated through increased investment in recycling programs, allowing Republic to further control the "evolving ton."

The Coca-Cola Co (KO): Coca-Cola is the world's largest manufacturer, distributor, and marketer of nonalcoholic beverage concentrates and syrups. The firm also sells a variety of noncarbonated drinks such as water, juices, and teas. Almost all the company's revenue is generated outside the United States thus extending Coke's footprint throughout the world.

Coke's core brands include Coca-Cola, Sprite, Dasani, Powerade, and Minute Maid.

Coca-Cola is financially sound. It will certainly generate free cash flow of around 20% of revenue and EBITDA to cover interest expense 16 times on average over a 10-year forecast period. It completely outstands vis-à-vis its competitors.

Coca-Cola's distribution network reaches more than 200 countries, turning competition almost impossible to catch up with the company. The infrastructure it uses is very complex and costly.

In addition, Coca-Cola is considered the most valuable brand thanks to its effective marketing and ability to adapt its product portfolio to customers.

Recently, Coke has extended its product portfolio into growing non-carbonated beverage categories in response to changing consumer preferences. Coke's acquisition of its bottling and distribution activities in North America should give it a closer relationship with retailers and prevent PepsiCo from gaining a competitive advantage in a fiercely contested market. The company's products represent around 3% of the estimated 50 billion beverages that are served every day around the world.

This definitely creates familiarity with its brands.


Rating: 2.8/5 (10 votes)

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