Subject: Re: Brk, it's time to declare a 1$ quarterly
I think the references to the 2014 dividend proposal aren't super helpful. Shareholders were voting on a specific proposal, not making a principled forever statement about dividends in any form. From the proxy statement (https://www.sec.gov/Archives/e...):
RESOLVED: Whereas the corporation has more money than it needs and since the owners unlike Warren are not multi billionaires, the board shall consider paying a meaningful annual dividend on the shares.

I would have voted against the proposal for two reasons:
1. I don't think that the company's dividend policy should be based on the fact that some owners aren't wealthy, and may need cash.
2. I am not in favor of regular, annual dividends.

But I'm surprised that so many people seem so opposed to dividends on principle. Two things can be true (and are true for me):
- I wish we were in a world where Berkshire had the ability to make good (i.e., at reasonable prices) and meaningful (i.e., sufficiently large to suck up incoming cash) investments in wholly-owned companies, marketable securities, add-ons to existing companies, and/or repurchases. You know, the things that Buffett says in his 2012 annual letter are superior to dividends (https://www.berkshirehathaway...., starting on page 19).
- In a world where those conditions are not met over a sustained period of time, and when there's no obvious indication that things will change, I believe the company should pay a dividend. What might offer evidence of such a world? A multi-year buildup of cash far in excess of any needs for our existing operations.

If things continue on as they currently are (i.e., little attractive opportunities for investment within or outside the company, including Berkshire's own stock, as demonstrated by a continued buildup in cash), I think there are really only a couple of alternatives:
- Expand the universe of possible investments (including investments in broad-based market index funds)
- Relax the constraints for repurchasing stock (be willing to pay higher prices)
- Consider large, irregular cash dividends

I really don't see any defense for a *principle* that dividends shouldn't be paid, ever. Berkshire paying dividends isn't super appealing to me. But none of the other options are appealing to me either. I wish we weren't in the world we are in, where attractive investments are so hard to find. But I also am not interested in a Berkshire Hathaway that continues to retain all generated cash despite no demonstrated ability/willingness to invest it.

Anyway, the discussion in the 2012 letter is very good. An excerpt:

A profitable company can allocate its earnings in various ways (which are not mutually exclusive). A
company’s management should first examine reinvestment possibilities offered by its current business – projects to
become more efficient, expand territorially, extend and improve product lines or to otherwise widen the economic
moat separating the company from its competitors.

I ask the managers of our subsidiaries to unendingly focus on moat-widening opportunities, and they find
many that make economic sense. But sometimes our managers misfire. The usual cause of failure is that they start
with the answer they want and then work backwards to find a supporting rationale. Of course, the process is
subconscious; that’s what makes it so dangerous.

Your chairman has not been free of this sin. In Berkshire’s 1986 annual report, I described how twenty
years of management effort and capital improvements in our original textile business were an exercise in futility. I
wanted the business to succeed and wished my way into a series of bad decisions. (I even bought another New
England textile company.) But wishing makes dreams come true only in Disney movies; it’s poison in business.