Like the empires of Rockefeller and Carnegie before him, Buffett will eventually be dethroned and his legacy tainted. Berkshire unquestionably has the means to pay a dividend. It’s a component of the S&P 100, S&P 500, and it’s basically used as Warren Buffett’s investment firm. There’s a chance Buffett institutes a dividend even before he leaves Berkshire. Combining Buffett’s retirement with the company’s growing size and even-faster-growing cash pile, it might seem like dividends are all but a sure thing for the Berkshire Hathaway investors of the future. Warren Buffett loves dividends. Buffett prefers to keep about $20 billion of cash on hand in case some serious insurance claim needs to be paid, which gives $99 billion of cash available for acquisitions or internal investment. A real estate investment trust or REIT, Store Capital invests in single-tenant … Berkshire was deeply vested in Costco until late 2020. Berkshire Hathaway management isn’t shy about its distaste for dividends: “The question is about evaluating Berkshire when it doesn’t pay any dividends. If Apple were to pay out $0.82 a share in 2021, and Berkshire Hathaway were to retain all 907,559,761 shares, Buffett's company would net a cool $744,199,004 in dividend income. The problem is that Berkshire doesn’t believe in paying dividends, owed to Buffett’s own aversion to doing so. Berkshire Hathaway rewards shareholders by a laser focus on the value of a dollar to Berkshire Hathaway. Let’s break down the Berkshire Hathaway dilemma. Berkshire Hathaway is an important diversified holding company led by renowned investor Warren Buffet that invests in the insurance, private equity, real estate, food, apparel, and utilities sectors. But for a man who covets dividends so much, some are left scratching their heads when they find out that Buffett’s company, Berkshire Hathaway, does not pay a dividend for its shareholders – especially since the company’s cash pile is worth nearly $50 billion. Of course, Berkshire also owns tens of billions of dollars’ worth of publicly-traded stocks like its sometimes decade-long positions in companies like Coca-Cola (KO), American Express (AXP), Apple (AAPL), and Wells Fargo (WFC). The Oracle of Omaha has spent half a century building today’s Berkshire. However, Buffett is 89 years old, and thus will eventually be replaced as CEO of Berkshire, potentially in the not-too-distant future. The company will still have outstanding investment managers. 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. Berkshire Hathaway is the furthest thing from a Dividend Aristocrat, an exclusive group of 57 stocks in the S&P 500 Index with 25+ years of annual dividend growth. You’ll find Berkshire Hathaway’s investments aren’t always in lockstep with the statements of its famous CEO. (1) during the period did our book-value gain exceed the performance of the S&P; and To deploy any meaningful proportion of Berkshire’s capital, the company’s management will have to target very large acquisitions. If these tests are met, retaining earnings has made sense.”. Berkshire has its core insurance subsidiaries like GEICO, General Re, and Berkshire Reinsurance, as well as wholly-owned subsidiaries like Duracell, Fruit of the Loom, Precision Cast Parts, See’s Candies, Dairy Queen, and a host of others. Investing is what Buffett loves, and it’s what he’s likely going to continue doing until the day he dies. The company has publicly stated that Buffett’s role will be split up upon his departure. Buffett has limited opportunities to continue allocating capital within Berkshire at large returns, making it more difficult for the firm to not pay a dividend, says Morningstar's Gregg Warren. As a financial wizard, Buffett knows buying stock back keeps driving his Berkshire shares up. I believe that as long as Buffett is in charge, the conglomerate will not pay a dividend to shareholders for several reasons. 3. Berkshire is so huge today that it has become difficult for the company to identify acquisition opportunities large enough to move the needle on its cash pile. The principal reason why Berkshire doesn’t return cash to shareholders via dividends is because Buffett doesn’t believe that is a good use of cash. There’s just one problem: The company doesn’t pay a dividend. In other words, Berkshire has an enormous amount of capital available that is highly liquid. 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