No. of Recommendations: 13
Take a look at the spy yield chart. With the current yield at historic lows would it be fair to ask Buffett a simple question.
Dear Uncle, with your favorites long term hold currently yielding 1.1 % have you given much thought to brkb yielding a half to 1 % next year? Would that dividend increase demand for brkb common?
It would possibly increase demand for BRK-B. Because many people implicitly believe that dividends are free money.
This is evidenced in the CEF field. Two CEFs that have essentially identical holdings, but one pays a dividend and the other doesn't -- or one pays a high yield and the other a low yield. The high yielder sells for more than NAV while the low yielder sells for less than NAV. But when you look at the total return charts, the first has much lower total return. You could literally buy the low yielder and sell enough to match the high yielder's dividend and make more money.
Anyway, take a look at a 5 year chart of total return for SPY, SPYD (S&P 500 High Dividend ETF) and BRK-B, and SPHD (S&P 500 High Dividend Low Volatility ETF).
https://testfol.io/?s=gA8qKQAfeIcOr the 10 year. The high dividend payers are bad.
Taking (spending) the dividends, SPYD and SPHD grow $10,000 to $14,400. SPY grows to $32,400. BRK-B to $35,900.
Total return while withdrawing $400/yr (4% of the initial $10,000) SPY & BRK-B *still* soundly beat SPYD and SPHD. They are almost double at the end of the 10 years.
https://testfol.io/?s=77Z8CfQviQWThat "free money" is rather expensive.
