No. of Recommendations: 10
IF brkb yielded around 1 percent and traded on average 2-5 % higher due to increased demand from funds, institutions, and private investors, globally, who demand a dividend, would you be very happy to pay the tax on the 1 percent dividend yield?
Absolutely NOT!!! This is an absurd proposition. It would cost me roughly 1/3% EACH YEAR forever in return for a measly one time 2-5% bump in value. I'll give my usual real-world example. If the Gottesman's had paid 1/3% in taxes each year on their shares over their 50+ year holding period, then their charitable gift a few years ago would have been worth nearly 20% less than it was. And it would very likely have been even worse than a 20% hit because tax rates fluctuated over the decades, and they mostly lived in a high tax state where another few percent would have been paid over the years to the state.
Or are you claiming that the bump in value would be 2-5% EACH year? Are you claiming that somehow intrinsic value rises due to that measly dividend? This would be an even more absurd proposition. I'm pretty sure you don't mean this, but perhaps you could clarify.
Futhermore, the assertion of a 2-5% bump in value is suspect in itself. Even if it does occur, it is likely to only be temporary. Once the institutions that want to own a 1% yielding stock have made their purchases, trading would return to normal, and that bump would almost entirely dissipate.
However, if you are truly willing to pay 1/3% each year in return for a 2% increase in value, I'm pretty sure people would be willing to create such a Berkshire derivative and sell it to you.
