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The real reason you don't want Berkshire to pay you a dividend, is because it will cost you a ton of money!

I got curious about the claim that Buffett would pay a dividend when it because untrue that $1 of retained earnings was worth LESS than $1 of increased market cap. So... how has Berkshire done by that metric? With the help of ChatGPT who turned me on to a site where I could get free financials imported into an excep spreadsheet, I got 20 years of financial information for BRK. After screwing around a bit, I determined that "retained earnings" essentially all shows up in the "Total Stockholders' Equity" on the financial spreadsheets.

So I looked at the change in Total Stockholder's equity over a 10 year lookback period and compared it to the change in the Market Cap of the company over that same 10 year period. The ratio of those two numbers gave us the amount by which Market Cap had increased in dollars for each $1 of retained earnings.

Even better, I got the CPI and adjusted all 20 years of the Market Cap and Stockholder's Equity by inflation so the whole thing is done in 2025 US dollars. So we don't have inflation making it look like we got rich where all we did was stay even.

So what was the result? With 20 years of data and 10 years of look back I could get numbers for the last 10 years. And what lovely numbers they are! Most recently we are seeing $1 of retained earnings showing up as a whopping $1.69 of additional Market Cap! This is the high end of the range, but the average over the last 10 years is $1 of retained earnings shows up as $1.40 of increased market cap.

So that's the REAL reason you don't want a dividend. It would make you 40% poorer, averaged over the last 10 years. Instead of a $1 of dividend, just go ahead and sell enough shares to pay you out $1.40.

Its as though that $300 billion or whatever cash pile Berk's got right now is worth $420 billion as long as you leave it retained by Berkshire and get your cash by selling shares instead of demanding a 40% haircut by demanding that Berkshire send you the dollars directly!

See, its not a matter of philosophy or taxes. Its just math. Or science, or one of those STEM thingys.

Yours,
R:) and (:hatGPT

 		d equity 10 years	d market cap 10 years	$ Market per $1 retained
9/30/2025	$452,158,000,000	$763,869,073,610	$1.69
6/30/2025	$421,946,000,000	$713,207,048,995	$1.69
3/31/2025	$413,013,000,000	$793,287,641,049	$1.92
12/31/2024	$409,198,000,000	$607,729,044,606	$1.49
9/30/2024	$391,613,000,000	$651,591,145,524	$1.66
6/30/2024	$367,692,000,000	$561,092,340,843	$1.53
3/31/2024	$343,878,000,000	$599,048,016,144	$1.74
12/31/2023	$339,383,000,000	$479,527,162,732	$1.41
9/30/2023	$316,948,000,000	$480,409,050,299	$1.52
6/30/2023	$337,867,000,000	$462,752,594,655	$1.37
3/31/2023	$306,483,000,000	$419,526,763,494	$1.37
12/31/2022	$285,777,000,000	$455,998,344,457	$1.60
9/30/2022	$270,828,000,000	$367,831,718,742	$1.36
6/30/2022	$283,850,000,000	$395,814,467,611	$1.39
3/31/2022	$332,144,000,000	$579,694,550,875	$1.75
12/31/2021	$341,349,000,000	$477,168,246,971	$1.40
9/30/2021	$312,523,000,000	$439,386,753,592	$1.41
6/30/2021	$307,402,000,000	$442,050,473,035	$1.44
3/31/2021	$287,932,000,000	$380,777,057,018	$1.32
12/31/2020	$285,846,000,000	$343,393,046,172	$1.20
9/30/2020	$265,484,000,000	$302,472,640,160	$1.14
6/30/2020	$250,732,000,000	$234,677,776,770	$0.94
3/31/2020	$224,356,000,000	$250,122,600,395	$1.11
12/31/2019	$293,689,000,000	$400,167,872,852	$1.36
9/30/2019	$271,536,000,000	$354,853,853,226	$1.31
6/30/2019	$268,017,000,000	$391,529,371,233	$1.46
3/31/2019	$266,079,000,000	$373,158,468,152	$1.40
12/31/2018	$239,436,000,000	$353,403,184,107	$1.48
9/30/2018	$255,451,000,000	$325,238,854,427	$1.27
6/30/2018	$240,100,000,000	$274,139,150,161	$1.14
3/31/2018	$228,029,000,000	$284,425,134,873	$1.25
12/31/2017	$227,563,000,000	$269,161,836,386	$1.18
9/30/2017	$188,375,000,000	$268,466,705,969	$1.43
6/30/2017	$185,387,000,000	$250,699,638,031	$1.35
3/31/2017	$182,960,000,000	$242,664,230,671	$1.33
12/31/2016	$173,651,000,000	$232,304,254,155	$1.34
9/30/2016	$167,020,000,000	$209,398,334,586	$1.25
6/30/2016	$165,412,000,000	$216,260,205,468	$1.31
			
		Mean	$1.40

With the help of ChatGPT who turned me on to a site where I could get free financials imported into an excel spreadsheet

Care to share? Not sure how AI etiquette works...

Baltassar

Incredible but truly priceless. I wonder, who are the ignorant suckers that would buy the spy which pays a quarterly dividend? Who would buy utilities, oil stocks, banks, food and beverage, that pay dividends? Why does the investing community globally refuse to get educated by the brilliance of this board? Why buy those five stocks in Japan when we have the pink sheets in America , not to mention non div paying meme coins or bitcoin. Swing uncle swing. Truly remarkable.

Harvey, instead of posting every day the same thing, just buy an index fund .

"Why buy those five stocks in Japan when we have the pink sheets in America?"

While the shares are available as "pink sheet" stocks, they are not very liquid in the US meaning a potential haircut on the purchase and a skinning on their sale. To add insult to injury, the bank which packages the ADR charges an annual fee for the service to the shareholder. Considering these are among the most liquid shares in Japan and the friction for currency conversion at Interactive brokers is minimal - why wouldn't you buy them in Japan (assuming owning them in their native currency met part of your diversity goals)?

The main argument for owning BRK is that one is betting that WB and crew will be able to deploy the funds better than you can (capital gains taxes are a wash - unless you hold the shares until you croak - in which case, who cares). Making use of his choices, independent to owning BRK, is simply a matter of preference.

Jeff

Excellent work @RalphCramden!

Just for my own clarification, I assume you converted each year's retained earnings into 2025 numbers by using a chained CPI from that year until 2025. Then you added these CPI adjusted retained earnings for 10 years. Please confirm my understanding.

These were exactly the same arguments Buffett used roughly 10 years ago when he wrote about the relative unattractiveness of dividends (because you can always get > $1 of retained earnings by selling a portion of your stock).

Nice. Thanks for sharing.

"After screwing around a bit, I determined that "retained earnings" essentially all shows up in the "Total Stockholders' Equity" on the financial spreadsheets." Nice to see the numbers checked instead of just assuming that they do.

May I make one suggestion? It's nice to highlight the changes over 10 year increments, but you can also just plot market cap versus shareholder equity and draw a line through it. That way you get to show all 20 years of data. Mathematically the appropriate line is a power law (log-log plot). Market cap and book value are available each quarter all the way back to October 1964 (end of fiscal year 1964). You can use all or any part of the data. The log-log plot from Oct '64 through Sept '25 is a straight line with r^2 = 0.980, even though there are two notable knees in the plots of book value and market cap versus time, occurring together at about 1978 and 1999.

With book value growing at 10%/year I certainly don't want a dividend.

hclasvegas:
A dismissive screed in lieu of any math or finance or anything that might even begin to read on whether the analysis presented made the slightest bit of sense or not.

hc:

Given your preference for receiving cash dividend from BRK as opposed to selling each $1 of BRK cash for $1.40 by selling a share of BRK, I'll make you an offer good any time you care to exercise it.

I will be happy to buy your BRK shares from you at BOOK value, as many or as few as you want to sell. You can pretend it is a cash dividend from Berkshire.

Cheers,
R/

Baltassar:
With the help of ChatGPT who turned me on to a site where I could get free financials imported into an excel spreadsheet

Care to share? Not sure how AI etiquette works...

Of course, good idea!

https://site.financialmodelingprep.com/

Sign up for a free account and get an API key for free information. You can access through python programs (or presumably other languages) but also by putting an FMP add-on in excel and get the free information delivered to a spreadsheet. I thought it was one of the coolest things I've ever seen!

R:)

Munger_Disciple:

Thanks for the kudos!

Just for my own clarification, I assume you converted each year's retained earnings into 2025 numbers by using a chained CPI from that year until 2025. Then you added these CPI adjusted retained earnings for 10 years. Please confirm my understanding.

I had a chained CPI from 9/30/2025 back to 9/30/2005. I had quarterly market cap numbers and quarterly total shareholder's equity numbers. I used the chained CPI to convert ALL of those numbers to their value in 2025 dollars.

I then did the 10 year differences to create the columns in my spreadsheet. One column was the amount of (inflation adjuated) market cap added in the previous 10 years, essentially MarketCap(9/30/2025) - MarketCap(9/30/2015) and then for retained earnings (minus buyback spending) ShareholderEquity(9/30/2025)-ShareholderEquity(9/30/2015).

I then got the market value associated with $1 of retained earnings:

[ MarketCap(9/30/2025) - MarketCap(9/30/2015) ] / [ ShareholderEquity(9/30/2025)-ShareholderEquity(9/30/2015) ] = DollarsofMarketCap arising from $1 of retained earnings.

Unless there is some flaw in my thinking, there is an amazing benefit to leaving earnings retained in Berskshire. Like $1.69 market value per $1 retained recently, $1.40 per $1 retained averaged over the last 10 years of endpoints checked.

Cheers,
R:)

" I will be happy to buy your BRK shares from you at BOOK value, as many or as few as you want to sell. You can pretend it is a cash dividend from Berkshire.

Cheers,
R/"

Is that what you did for a living, rip off the elderly? I expect my less than IV from you, your pal, hc.

I don't take checks written on Nigerian banks but from you I will accept payment in trump meme coins.

Unless there is some flaw in my thinking, there is an amazing benefit to leaving earnings retained in Berkshire. Like $1.69 market value per $1 retained recently, $1.40 per $1 retained averaged over the last 10 years of endpoints checked.

@RalphCramden,

Your calculations appear correct to me. They really hit home the point that shareholders are far better off leaving the earnings to be retained by BRK to be reinvested by Warren & Greg.

I always knew dividend is very sub-optimal for BRK shareholders because the stock almost always traded at a premium to book value so anyone wanting/needing cash can always sell a portion of their stock well above book and come out way ahead. But your diligent analysis makes it crystal clear that we got something like $1.40 in market value for every $1 of retained earnings (adjusted for inflation) in the past decade.

Once again, well done!

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