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From today’s Tilson Daily…

“ But it wouldn't surprise me if Buffett and his successor Greg Abel announce that Berkshire will start returning capital to shareholders via dividends. That could happen at next year's annual meeting.

If so, I think the company might pay a modest ongoing dividend plus occasional large special dividends – similar to what big-box retailer Costco Wholesale (COST) does.”

https://stansberryresearch.com/whitney-tilsons-dai...

ciao

Ugh. Hope not.

Rumors of a dividend have been around for years, I wouldn't worry too much about this. The last thing Greg would want to do is make such a big change early on in his tenure.

tecmo
...

There is zero chance of a dividend as long as Warren holds the stock directly because he would incur personal taxes on the dividend payment instead of all benefit of his stock holding accruing to charities.

“ But it wouldn't surprise me if Buffett and his successor Greg Abel announce that Berkshire will start returning capital to shareholders via dividends. That could happen at next year's annual meeting.

If so, I think the company might pay a modest ongoing dividend plus occasional large special dividends – similar to what big-box retailer Costco Wholesale (COST) does.”

This is a lazy statement in my opinion. What exactly leads him to believe a dividend is coming? The large cash pile? For someone that has followed Berkshire (and invested) as closely as him has he not heard Buffett's comments on the subject? Does he not know Berkshire shareholders already resoundingly voted down a dividend? Unless he has some kind of insight that we don't know the statement is dumb and a waste of time.

With that said, I think we all get a little too sensitive on the subject. I don't want a dividend but so long as there is a viable divided policy then I really wouldn't care if we had one. The key is putting it in writing. All I ask is that the amount paid out is really small and that said policy dictates that it can never go above that small percentage.

There is zero chance of a dividend as long as Warren holds the stock directly because he would incur personal taxes on the dividend payment instead of all benefit of his stock holding accruing to charities.

I hope this isn't the governing attitude - one person's individual preferences shouldn't stand in the way of the best decision from the business's perspective, even if that one person is Warren Buffett. That's the very definition of agency costs: when the manager's personal preferences come before the interests of the shareholders.

I'm comfortable with the idea of carefully managing the firm's capital rather than rashly investing it; I'm pretty sure I was at the 2000 annual meeting when the audience member criticized Buffett for not investing in tech stocks and I certainly don't want to be that person. That being said, as cash builds up and builds up, with desirable reinvestment opportunities looking sparse, there are 3 options:

1. Issue a dividend
2. Buy back shares
3. Continue to wait for some future acquisition of either whole companies or marketable securities

You can say "no dividends" out of principle, but I don't think that's fair. There are problems with all 3 options. Dividends incur incremental taxes (for some, but not all), and go against the spirit of "Warren Buffett can invest my money better than I can". Repurchasing shares is inappropriate when the shares are trading comfortably above intrinsic value (which I still think they are). And I think those two things are what lead people to say, "Let's continue to wait, and continue to retain our earnings/cash." But at some point, this can't be the answer - that's why Berkshire's Owners' Manual has the retained earnings test.

I don't know if I'm ready yet for a dividend, but in a world where neither acquisitions nor repurchases are attractive over a sustained multi-year period, I think it's poor thinking to dismiss the idea out of hand and I certainly hope that Buffett isn't assessing dividend policy based on his own personal circumstances as opposed to the interests of the shareholders at large.

Repurchasing shares is inappropriate when the shares are trading comfortably above intrinsic value (which I still think they are). And I think those two things are what lead people to say, "Let's continue to wait, and continue to retain our earnings/cash." But at some point, this can't be the answer - that's why Berkshire's Owners' Manual has the retained earnings test.

I agree the shares are trading somewhat above intrinsic value, perhaps a minority opinion here? That won't always be the case. Who would have thought the market would allow Berkshire to buy back nearly $80B already? It will happen again.

Has Berkshire been passing the revised retained earnings test? And does it even make sense, now that book value is losing its relevence?

https://newsletter.rationalwalk.com/p/berkshire-ha...

The revised retained earnings test requires two conditions to be true:

Berkshire’s increase in book value must exceed the performance of the S&P 500 on a five year rolling basis. Although not explicitly stated, I would interpret this to mean book value on a per share basis.

Berkshire’s stock must consistently sell at a premium to book value.

" I don't know if I'm ready yet for a dividend, but in a world where neither acquisitions nor repurchases are attractive over a sustained multi-year period, I think it's poor thinking to dismiss the idea out of hand and I certainly hope that Buffett isn't assessing dividend policy based on his own personal circumstances as opposed to the interests of the shareholders at large."


Good morning, it's in Buffett's best interest as well but like most here, he just doesn't understand why, yet.

Good luck, hc.

now that book value is losing its relevence?
I don't think BV is losing it's relevance. This is my Price/PeakBV chart, updated with 3rd quarter BV:

https://drive.google.com/file/d/1jijWaLLnomULsIO8e...

Price = within 1.2-1.6 of PeakBV is still fully intact.

I don't think BV is losing it's relevance.

It still seems to be pretty good. It's a somewhat flawed back-of-the-envelope method, but it always was.

The bigger concern:
There have long been reasons to suspect that the fair P/B ratio might rise slowly over time.
But if anything, I think the fair P/B has fallen somewhat because the operating earnings have been quite poor for quite a while now - distressingly little progress in several years. For example, whatever the fair P/B is for BHE, it's lower than it was: the valuation multiple on those assets isn't what it used to be as they simply can't earn as much as they used to. Earnings at the railroad have been on a bumpy slight downtrend for a few years, a fifth lower in real terms than the peak rolling-four-quarter stretch about 4 years ago. Maybe it's a transient slow stretch, but it still isn't happy.

And of course the notion of applying a valuation multiple to the cash pile is based on the notion that any "higher than usual" portion is going to be allocated profitably within a reasonable amount of time. At some point even the most die-hard bulls have to question that thinking to some degree.

Investments per share have been rising very nicely lately, which has helped to offset the lack of progress on operating earnings, but any two-column type valuation metric is lagging any book-multiple type metric. Mine have diverged, anyway. My estimate of real "steady things" earnings from operating groups has risen only inflation+0.4%/year in the last 3 years, and that's entirely from the mild tailwind from a few buybacks in the first year. And times have been pretty good.

By "steady things" I mean the sum of after-tax real earnings per share from rails, utilities, manufacturing/service/retail, and a cyclically adjusted estimate of underwriting profit.

Jim

I hope this isn't the governing attitude - one person's individual preferences shouldn't stand in the way of the best decision from the business's perspective, even if that one person is Warren Buffett

Of course not. Over 90%+ of shares (excluding Warren's) voted for NO dividend. Thus it's very clear that almost all shareholders of BRK don't want a dividend as long as retained earnings test is met (as originally proposed by Warren & Charlie):

A dollar of retained earnings must produce > one dollar of market value.

This test is unrelated to book value metric which lost significance as Warren pointed out several times before getting rid of it in the performance table. Given that buybacks almost always occur above book (but below intrinsic value), it loses even more significance over time.

In summary, Warren's personal situation aligns beautifully with that of the 90%+ of his partners. And the board & Greg know when they can no longer retain earnings anymore. I hope that day is very, very far off as I view it as a sad day indeed for it's the day BRK management & board declare defeat in terms of their ability to retain earnings effectively and wisely and reinvest them for the benefit of shareholders.

It’s a no-brainer, have another vote. If they had a shareholder vote the first time, why would they force massive undesirable tax bills on shareholders the second time?

Shareholders should have another vote on a dividend proposal and hopefully it will be well written as opposed to how poorly written the previous proposal was. HC, the ball is in your court.

Shareholders should have another vote on a dividend proposal and hopefully it will be well written as opposed to how poorly written the previous proposal was. HC, the ball is in your court.

HC write a proposal?...
I think it would look something like this:
"The old man has bamboozled the madrasa, the usual suspects keep drinking the kool-aid, if we get a divi the price will go up no?
That would be good. So tell the old man to pay us a divy 'cause the dancing girls and ladies of the night don't accept intrinsic value.
UCMTSU. I'm off to my pickleball lessons." ~HC

“ HC, the ball is in your court.“ Sorry pal, if Buffett wanted to give away his life’s work near BV 20 years ago it was ok by me. I hope I bought shares that the gates foundation was selling back then. I love what I saw the past two weeks, we all get to make our own decisions. Don’t upset the congregation.

Stable genius, after 25 years of reading the brilliance of my thoughts, you, almost make sense. Carry on pal.

Genius, help us out, when 5 of the Mag 7 initiated their small dividend, did they ask their partners for permission do the right thing? Ask the loyal members of the congregation for help if I’ve confused you. This really isn’t that complicated old bud.

I don't know if I'm ready yet for a dividend, but in a world where neither acquisitions nor repurchases are attractive over a sustained multi-year period, I think it's poor thinking to dismiss the idea out of hand and I certainly hope that Buffett isn't assessing dividend policy based on his own personal circumstances as opposed to the interests of the shareholders at large.


Perhaps, but the situation where both acquisitions and repurchases are unattractive can't remain true forever. If it were true, it would mean it is impossible forever to productively deploy capital.

“ I don't know if I'm ready yet for a dividend, but in a world where neither acquisitions nor repurchases are attractive over a sustained multi-year period, I think it's poor thinking to dismiss the idea out of hand and I certainly hope that Buffett isn't assessing dividend policy based on his own personal circumstances as opposed to the interests of the shareholders at large.” Thanks for contributing great value in this forum. As you know the typical Brk partner will move the goal posts and refer to what Buffett said 25 years ago. It will be very interesting to see how our board of directors think once Buffett passes the torch. I would love to know how often Gates and Buffett have discussed the pros and cons of paying a small dividend, obviously Gates disagrees with Buffett. The Mag 5 that pay a small dividend seem to trade just fine.

Munger Disciple:
A dollar of retained earnings must produce > one dollar of market value.

This test is unrelated to book value metric which lost significance as Warren pointed out several times before getting rid of it in the performance table. Given that buybacks almost always occur above book (but below intrinsic value), it loses even more significance over time.

I've never seen this tested.

It occurs to me that "shareholder equity" is, essentially, the accumulated retained earnings, especially if we look at the increase in shareholder equity over a 10 year period, this is it seems pretty much the total retained earnings.

And Market Cap is market value. So if we look at the change in market cap over the last 10 years divided by the change in shareholder's equity over the previous 10 years, we should get a pretty nice 10-year smoothed representation of how much a $1 of retained earnings returned as market value over that previous 10 years.

The table is below, data courtesy of FMP https://site.financialmodelingprep.com/developer/d... free API key

Note its been as high as $1.92 per $1 retained which happened recently, 3/31/2025-3/31/2015. It has been below $1 ($0.94) for only one 10 year period in the last 10 years (6/30/2020 - 6/30/2010). It averages $1.40 over this time period, but I'm not sure what exactly averaging this amount might mean, I guess its a cut at a typical value.

It further occurs to me looking at this that inflation is significant over a 10 year period. A $1 10 years ago is worth $1.37 in todays dollars. Since I am looking back over 10 years without correcting for inflation, converting this into real dollars might change this, but that is a project for another day.

Enjoy,
R:

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

It further occurs to me looking at this that inflation is significant over a 10 year period. A $1 10 years ago is worth $1.37 in todays dollars. Since I am looking back over 10 years without correcting for inflation, converting this into real dollars might change this, but that is a project for another day.

Warren suggested a 5-year test in the past. I believe he meant $1 of retained earnings should create > $1 of market value on a present value basis.

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