For over 25 years, Bill Gates, primarily through the Gates Foundation Trust, has been giving away an increasing share of the wealth created from his founding and scaling up of Microsoft (MSFT 4.13%) into one of the world's leading tech companies.
Gates' foundation hasn't kept its $31.6 billion endowment entirely in Microsoft shares. In fact, after decades of slowly selling off its position, the Gates Foundation sold off the last of it during the first quarter of this year, according to the company's latest 13F filing with the Securities and Exchange Commission (SEC).
You have likely heard of the fund's top holdings, which include Berkshire Hathaway (BRKA +0.29%) (BRKB +0.28%), WM (WM 0.27%), and Canadian National Railway (CNI +1.52%), but alongside these high-profile stocks are a few under-the-radar names.
One that comes to mind is West Pharmaceutical Services (WST 1.31%). The foundation only initiated the position last quarter, but given how this stock could become one of the future Dividend Kings, or stocks with over 50 years of consecutive dividend growth, who knows? The Gates Foundation could hold onto it for quite some time.
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West Pharmaceutical Services at a glance
Exton, Pennsylvania-based West Pharmaceutical may not be one of the most well-known healthcare stocks, but this isn't some small enterprise. Rather, West is a leading manufacturer of containment and delivery systems for injectable drugs.
NYSE: WST
Key Data Points
In recent years, the company's earnings have held steady, with the exception of a dip in revenue and earnings in 2024. Operating in a relatively recession-resistant industry, West's earnings consistency is not surprising. After several years of steady results, West may be approaching a period of elevated earnings growth.
Sell-side forecasts call for West Pharmaceutical Services to report earnings per share (EPS) of $8.62 and $9.55 in 2026 and 2027, respectively. Compared to the forecast EPS of $7.29 for 2025, this suggests annualized earnings growth of 14% to 15%. This helps to explain why the stock trades at such an elevated valuation: 37.6 times forward earnings.
That said, even if the company's growth slows once again, a factor may help shares deliver strong total returns in the years ahead.
A Dividend King in the making?
At first glance, West Pharmaceutical Services' dividend may seem small relative to the stock price. The stock's current forward dividend yield is just under 0.3%. However, considering the company's dividend growth track record, these payouts could become an increasingly important component of total returns over time.
For 32 years in a row, this company has increased its dividend. In other words, the stock is less than two decades away from reaching Dividend King status. Over the past 20 years, dividend growth has averaged around 6.7% annually.
Although dividend growth has slowed down in recent years, the aforementioned earnings forecasts suggest a dividend growth resurgence could be around the corner. Strong dividend growth, coupled with continued earnings growth, could yield total returns that make this an appealing opportunity for investors in both dividend and growth stocks.
