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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
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Author: DTB ✭  😊 😞
Number: of 15058 
Subject: Re: Strategy - covered calls in retirement
Date: 07/18/2023 3:11 PM
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... even when they ARE slightly value destroying, sometimes there isn't another really good choice.
I can't really think of anything else that (say) Apple could do with all that money. The goggles were expensive to develop, but not THAT expensive.
Buy Berkshire shares?
Even that wouldn't soak up all that spare cash flow for long.


I can think of one thing that could soak up a lot of cash - just pay out a massive dividend. They had earnings of $100b last year, and paid out $15b in dividends, while repurchasing shares for $89b. My modest proposal: just pay out $100b in dividends, suspending the repurchases, begun when the PE ratio was less than 10. And resume the repurchases when the anticipated ratio is, say, 20.

As a vicarious shareholder of Apple by virtue of Berkshire, I would much prefer seeing a big dividend than more share repurchases of a company that is now trading for 33 times earnings with an annual growth rate of 15% over the last 3 years, a growth rate that is, in my opinion, likely to be hard to maintain even at that level.

dtb

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