How did you like the way the financial press responded to the MSFT dividend policy in 2004? An admission by MSFT that its growth days were over ?

I'm not sure how the press reacted, but I sure know how the market reacted. Yes, it was perhaps taken as a signal that their growth days were over. It certainly wasn't taken as a signal to rerate the stock upwards.
They underperformed the average S&P 500 firm by a rather amazing 6.91%/year in the subsequent decade. Total return up 30% versus average firm 149%.

That's despite the underlying business doing very well in the next decade.
Sales per share rose 13%/year, cash flow per share grew 10.5%/year, EPS grew 11.0%/year, but stock total return (including that famous dividend!) was 2.61%/year.
Ending P/E was about 9.2

Interestingly, those ten year growth rates are almost the same in the ten years ending now, average of the three same figures only 0.3% better. But it's trading at about 37 times recent earnings.

Jim

Berkshire Hathaway FAQ

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