Over time, it has built an enviable position that capitalizes on economic growth in a variety of ways. For investors, Berkshire has many of the characteristics of a great investment — a wide economic moat, a strong track record, and a management team that recognizes the value of taking care of shareholders.
The only thing missing is a dividend. However, given the year reign of Warren Buffett at the top of the company, investors might wonder if this hard line policy of no dividends will change when he eventually steps down. All you get with Berkshire stock is that you can stick it in your safe deposit box, and every year you take it out and fondle it. If Berkshire were to pay a dividend, every dollar of dividend payments received by shareholders would be one dollar fewer being managed by Buffett.
Unless investors believe they can outperform Warren Buffett, dividends are detrimental to total returns as a shareholder of Berkshire Hathaway. Buffett understands this, and he is against dividend payments as a result. However, Buffett is 89 years old, and thus will eventually be replaced as CEO of Berkshire, potentially in the not-too-distant future. If these tests are met, retaining earnings has made sense. According to Berkshire, from the company grew its per-share market value by This is why Buffett believes he can always find a better use for cash than to simply pay it out to shareholders.
For investors that want to see a cash dividend from Berkshire, there appears to be some hope. These individuals are Todd Combs and Ted Weschler, two ex-hedge fund managers personally selected by Buffett. Your Practice. Popular Courses. Dividend Stocks Guide to Dividend Investing. Stocks Dividend Stocks. Table of Contents Expand. Reinvesting Is Top Priority. Other Priorities. Prospects for Acquisitions.
The Bottom Line. Key Takeaways Berkshire Hathaway is an important diversified holding company led by renowned investor Warren Buffett that invests in the insurance, private equity, real estate, food, apparel, and utilities sectors. Despite being a large, mature, and stable company, Berkshire does not pay dividends to its investors. Instead, the company chooses to reinvest retained earnings into new projects, investments, and acquisitions.
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Another possibility is to add dividend income to the company's stockpile of cash to help finance its next big acquisition. Buffett loves dividend stocks, especially those that pay dividends consistently and make an effort to raise the payout year-after-year, because they provide a consistent source of cash flow that Berkshire can deploy in whatever way it sees fit. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price.
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