Post New

Over the last 26 years Berkshire's BV and IV growth have been quite consistent at 10%/yr, with an r^2 of 0.989. This is in spite of the 2000 tech crash, the 2008 financial crisis and the 2020 Covid pandemic. What changes and what growth do people here expect for BRK in 2026 and beyond?

If I had to guess, I'd guess slower growth. I'm not predicting a sudden fall. Berkshire is too sound for that, but a slow decline in growth. I don't expect Ted Weschler to make major changes to Berkshire's equity portfolio, at least not quickly, but I do expect Greg Abel to make a major acquisition. It's just too tempting for a new CEO with $377 billion in cash and T-Bills.

The broad market will affect Berkshire in two ways: (1) With a P/E of 28 and 3-year return of 20.6%/yr, the S&P 500 is highly likely to correct downward, and Berkshire's equity portfolio will fall with it, although not as much, and (2) this correction should present buying opportunities for Berkshire in its equity portfolio, and quite possibly present an opportunity to acquire a whole company.

What do you predict?

c6-7%

For what it's worth, two very sharp old timers who no longer post for obvious reasons, now agree that by mid 2027 brkb will pay a quarterly dividend.

Like most shareholder friendly moves in brkville that's too late but better late than never. IT's highly unlikely this will happen in 2026 while Buffett is still with us.

SPY yields a bit above 1 percent, it's VERY heavy weighted toward the highest risk stocks and is no longer appropriate to be all in, or 90 percent spy, after retirement. Wouldn't it be nice if Buffett had one last call with Becky and updated his decades old calls that are no longer appropriate? I seriously doubt Buffett would currently tout SPY 90 percent for retired individuals but who knows.

IF brk declared a 1$$ a B share quarterly dividend to yield a bit below 1 percent brk would be a compelling alternative to the very high risk SPY, based on its current concentration and valuation.

brk should also acquire the, right of first refusal, on all Foundation sales, which I first advocated in 2006.

I doubt any shareholder friendly moves happen in 2026.

I doubt any shareholder friendly moves happen in 2026.

I expect two.
* Some rational capital deployment, though probably not anything gigantic or wildly exciting
* A nice rational continuation of the no-div policy which makes continuing shareholders richer : )

Jim

* A nice rational continuation of the no-div policy which makes continuing shareholders richer : )
Love your consistency old bud, you stay wrong for decades. To repeat, why do 5 of the 7 mag pay a small dividend? Name the last three non dividend paying stocks that Buffett bought in size. These aren’t trick questions pal, both are well within your grade. I’m at the park you have three hours to answer very simple questions thank you.

Love your consistency old bud, you stay wrong for decades. To repeat, why do 5 of the 7 mag pay a small dividend? Name the last three non dividend paying stocks that Buffett bought in size. These aren’t trick questions pal, both are well within your grade. I’m at the park you have three hours to answer very simple questions thank you.

There’s a significant niche of long term investors who seek no dividend and no unnecessary taxes. Berkshire has served those investors very well. I hope they’ll continue to do so.

How hard is that to understand?

"A bee does not waste its energy trying to convince a fly that honey tastes better than 💩.
Some minds are not meant to be changed.
Save your energy for what actually matters."

How comforting, the same experts who assured us brk didn't need to authorize a buyback 20 years ago because Buffett could deploy the tens of billions in better investments than brk, weren't wrong.

The experts who opposed a 50 for 1 split of the Bs which was required to provide the liquidity needed to be added to indexes, weren't wrong. They claimed brk didn't need no stinkin index buying, brk would never suffer from a lack of demand, they weren't wrong.

Now the experts are opining, again, that brkb doesn't need no stinkin div, but they would never be wrong, again.


ucmtsu,no way. Buffett would never buy div paying stocks, that's for suckers.

Does brk pay taxes on div income from the securities we own?

Everybody needs a hobbyhorse.

" To repeat, why do 5 of the 7 mag pay a small dividend? Name the last three non dividend paying stocks that Buffett bought in size. These aren’t trick questions pal, both are well within your pay grade. I’m at the park you have three hours to answer very simple questions thank you."

Have any of you been deposed? Do you know what, non-responsive means?

Let's try again, can anyone answer two simple questions, who I don't have on ignore?

WHY do msft,aapl, goog, etc pay a dividend? WHY? Ignorant management? WHY?


Thank you.

They claimed brk didn't need no stinkin index buying, brk would never suffer from a lack of demand, they weren't wrong.

It sounds as if you'd like Berkshire stock to be permanently overpriced. Is that right?

Did anybody really say that Berkshire would never suffer from a lack of demand? I don't mind if the market isn't all jazzed up about Berkshire’s stock. In fact, I kind of like it when it's not. I don't suffer for it.

Have any of you been deposed? Do you know what, non-responsive means?

Let's try again, can anyone answer two simple questions, who I don't have on ignore?

WHY do msft,aapl, goog, etc pay a dividend? WHY? Ignorant management? WHY?

I don't know why, but I think I and others here have provided you some potential answers in the past, no deposition necessary! If those answers were not to your liking, that's on you.

Here's a question for you: Does the act of paying dividends increase the intrinsic value per share of the business that pays them?

WHY do msft,aapl, goog, etc pay a dividend? WHY? Ignorant management? WHY?

Why? Because it's an age old custom and there are enough rubes who think a dividend is free money, so they are attracted to dividend paying stocks. It may have made some sense many years ago, when selling 100 shares of a $10 stock periodically to supplement your income would cost you $200 in broker commissions. These days, when the sales commission is zero for almost everyone, it makes absolutely no economic sense to pay dividends. But hey, the rubes are still out there.

Elan

" Did anybody really say that Berkshire would never suffer from a lack of demand? I don't mind if the market isn't all jazzed up about Berkshire’s stock. In fact, I kind of like it when it's not. I don't suffer for it."


HOLD IT< did you find a brothel that takes IV net worth checks, and you didn't tell us?

" These days, when the sales commission is zero for almost everyone, it makes absolutely no economic sense to pay dividends. But hey, the rubes are still out there.

Elan"


Buffett is a, " rube" for buying those Japanese stocks? Oh my.

Buffett has also mentioned the benefit that Berkshire pays less tax on the public equity dividends received within than we would as individual owners receiving dividends. Per AI:

“Berkshire Hathaway pays corporate income tax (currently 21% federal rate) on most dividends received, but uses the Dividends Received Deduction (DRD), allowing them to deduct 50% to 100% of dividends, making their effective tax rate on those dividends much lower (e.g., 10.5% on some).

For wholly-owned subsidiaries (over 80% ownership), dividends are generally 100% tax-free, a key reason Buffett prefers buying entire companies.”

Simply sell some shares hc & create & control your own appropriate “dividend”- it works great! No divi box checking necessary. A lot of us have Zero interest in mandatory quarterly dividends- retention and compounding of those earnings has worked wonders over the decades, correct?! If it ain’t broke…Thank you

did you find a brothel that takes IV net worth checks, and you didn't tell us?

Sorry, HC. At current market prices, I do not feel like an oversexed guy in a whorehouse. 😉

Let's try again, can anyone answer two simple questions, who I don't have on ignore?

WHY do msft,aapl, goog, etc pay a dividend? WHY? Ignorant management? WHY?

Probably because management wants to satisfy the incorrect and illogical reasoning of people who implicitly believe that dividends are free money.

Just like a car dealer will gladly sell an expensive car to someone who cannot really afford it but want it anyway. Give the customer what he wants.
(Youtube is full of those car dealer videos. Also channels of tow truck companies doing repos of said cars from said buyers. e.g., "Life Wit Eb")

A lot of us have Zero interest in mandatory quarterly dividends-

Same way many retirees don't like RMDs.

Taxable income we don't want and paying taxes we would rather not pay, at a time and an amount chosen by others.

“ Probably because management wants to satisfy the incorrect and illogical reasoning of people who implicitly believe that dividends are free money.
“ Priceless. Thank you.

“ Same way many retirees don't like RMDs.

Taxable income we don't want and paying taxes we would rather not pay, at a time and an amount chosen by others.“ I feel very lucky and blessed to have to pay the tax on my rmds at 75 years old. Some of us are anal about tax avoidance, others might understand I’d rather have increased demand for my common and pay the tax on my small dividend. I still have no idea why the “ rubes “ at Apple, MSFT, google, ko, khc, oxy, etc pay a div or why Buffett refused to buyback brkb in 2007 and beyond near bv, and bought div paying stocks instead?

“ Yes, there are investment funds and some institutions that have mandates or strategies to focus exclusively, or nearly exclusively, on purchasing dividend-paying stocks. These investment vehicles are designed to generate a consistent stream of income for investors.
Dividend-Focused Investment Funds
These funds pool money from many investors and focus their portfolios on companies with a history of distributing earnings as dividends. They are popular with investors seeking passive income, such as retirees.
Dividend ETFs (Exchange-Traded Funds) and Mutual Funds: There are numerous ETFs and mutual funds that invest in a diversified portfolio of dividend stocks. Their investment strategies can vary, including:
High-Dividend Yield Funds: These focus on companies that pay a higher current yield than the broader market.
Dividend Growth Funds: These target companies that may have a lower current yield but possess a long track record of consistently increasing their dividend payments over time, indicating financial stability and future growth potential.
Dividend Income and Growth Funds: These aim to strike a balance between current income and future dividend growth.
Examples of such funds include the Vanguard High Dividend Yield ETF (VYM), Schwab U.S. Dividend Equity ETF (SCHD), and the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). You can use fund screeners on platforms like Fidelity or Morningstar to find specific options.
Institutional Investors
Certain institutional investors, particularly those with long-term income obligations and favorable tax treatment, may prefer or be restricted to holding income-generating assets.
Pension Funds and Endowment Funds: These types of institutions often favor dividend-paying firms for their portfolios because they need a stable, consistent income stream to meet their long-term payout requirements to beneficiaries. Their investment mandates are often structured to prioritize current income and stability over aggressive growth strategies that might involve non-dividend-paying growth stocks.
Mandates and Policies: While not all institutions have a strict "dividend-only" policy, many incorporate specific criteria that favor dividend-paying stocks, making a company's dividend policy a key factor in their investment decisions. This can make a company that initiates or increases a dividend attractive to billions of dollars in "equity-income" funds that previously couldn't invest in them. “ amen, never restrict potential demand.

“ Probably because management wants to satisfy the incorrect and illogical reasoning of people who implicitly believe that dividends are free money.“

Priceless. Thank you.

Trying to interpret your tea leaves here, HC. Is this you saying you think dividends are free money?

Does anyone listen to the Mag 7 calls? Has anyone ever asked WHY a growth company would initiate a very small dividend?

Could it be there are many institutions, funds, investors, who reached out to management and informed them that they cannot or will not buy non dividend paying stocks?

How much money fits in that class on investors, div paying stocks only?

WHY eliminate that potential demand for your security, because you want to avoid a small taxable event?

Deep thinkers might get this, eventually??

Has anyone ever asked WHY a growth company would initiate a very small dividend?

Don't you bother to read the replies to your posts?
It has been explained to you many times.


Really, overall it's the same reason why drug dealers sell drugs. If there is a demand for something, even if that thing is detrimental to the people demanding it, then somebody will fulfill that demand if they can make a profit from it.

It's really not that hard. Most of us figured this out long before they hit 75 years old.

It's really not that hard. Most of us figured this out long before they hit 75 years old.

He’s going to say the same thing over and over, again and again!!!

All broadcast, no reception.

“ Really, overall it's the same reason why drug dealers sell drugs. If there is a demand for something, even if that thing is detrimental to the people demanding it, then somebody will fulfill that demand if they can make a profit from it.” Oh my, priceless.

Buffett has rec 90 percent SPY in the past, case closed. Time to move on.

"
Dividend Yield
1.06%
Annual Dividend
$7.28
Ex-Dividend Date
Dec 19, 2025
Payout Frequency
Quarterly
Payout Ratio
28.34%
Dividend Growth
3.06% "

https://stockanalysis.com/etf/spy/dividend/

“Buffett has rec 90 percent SPY in the past, case closed. Time to move on.”

Good.

As far as the Buffett recommendation goes, I doubt he would change it. We all know cap weighting is far from optimal, but as Buffett wrote: “it takes care of itself”. There’s no rebalancing to do, no running screens on Value Line data, no decisions to be made. Yes, it gets out of hand every so often, so ride it up and ride it down, what’s the problem?

He’s going to say the same thing over and over, again and again!!!


Reminds me of the "flat earthers" and "sovereign citizen" class of youtube videos. But the youtube videos are more entertaining.

The "experts" here repeatedly make the same 2 mistakes...(1) that everyone thinks like they do and (2) that their opinion is that of the majority.

No prediction as to when but BRK paying a dividend is inevitable. Institutional ownership continues to increase and will go up even more once WEB's foundation begins selling shares. Everyone gave WEB a wide latitude (per his record rightfully so) but that won't be the case with Greg or anyone else...with all the cash just sitting there there will be a lot of pressure to initiate a dividend.

Hopefully when the yes/no decision on a dividend is made it will be done with both the best interests of the company and all shareholders being factored in. Whether or not some specific shareholders will pay more taxes because of it should not at all be a consideration.

Also I have yet to read a post here where someone wrote that dividends are "free money." No idea why "experts" keep mentioning that. Also wonder why the "experts" aren't contacting CEO's, attending shareholders meetings, etc. and speaking up about how misguided it is to pay a dividend. The only place one reads that is on this board...UCMTSU.

hc:
WHY do msft,aapl, goog, etc pay a dividend? WHY? Ignorant management? WHY?

OK I'll bite.

Because their shareholders aren't as smart as BRK shareholders?

Snark snark snark, sorry I'm guilty. But I did moderate my answer, my first thought was "pandering?" But then I realized that when management does something you agree with it is because they are smart, but when they do something you don't agree with it is pandering. So all I do is label myself as someone who doesn't want the dividend.

Don't you think if there was as much demand for a dividend paying BRK share that an ETF would have opened up which owned more or less nothing but BRK and paid a dividend? It would be a sorta fun and probably fairly simple exercise to design the ETF so that it generated about 0.5% a year in cash of which 0.25% could be thrown as a dividend and the other 0.25% could be the management fee. The ETF might find something clever like arb'ing .As and .Bs to raise a small income, and/or using their large position in BRK as a boat anchor to support making a market in options to generate the income.

It would be interestingly amazing if such an ETF could maintain parity in its share price with BRK itself. Then indeed the ETF would have a consistent 0.3% higher return than BRK and I guess would grow until it held a significant fraction of all BRK shares. But more likely that ETF share price and the BRK share price would be two lines that mostly tracked each other but deviated on average by about 0.5% per year, year after year.

Anywhoo what do you think? Does the fact that there is nothing like this in the market suggest that the giant sucking sound of demand for dividend from BRK can only be heard by dogs? Or will we someday have a series of ETFs that give a tailored dividend payout, a fund for 0.3%, a fund for 1%, a fund for 2%, etc?

Are there really enough people with enough money and enough interest in BRK that would invest in BRK if it threw 0.3% dividend who wouldn't invest now? Or is this just a chimera enabling a higher posting volume for hc?

Inquiring minds may not want to know, but I do.

R:)

Also I have yet to read a post here where someone wrote that dividends are "free money."

Because of that thinking is common, is widespread, among investors, even among money managers:

- 1-2 weeks ago in my table club after practicing finished we all sat together. A (intelligent) guy expressed exactly this opinion and the best efforts of a colleague (Berkshire shareholder too) to convince him otherwise failed.

- Just a few hours ago I read in NZZ (Neue Zürcher Zeitung) a discussion between Fonds- and Bank managers about their market expectations for 2026 --- with one of them pointing out that the Swiss sharemarket is very interesting because of the strong currency plus the many high dividends paying stocks.

(Original quote:
Hilb: Für hiesige Anleger ist es sehr interessant, im Schweizer Aktienmarkt investiert zu sein. Der Franken ist unsere Währung, zudem gibt es viele dividendenstarke Titel.)


What I do not understand: Why for the umpteenth time an endless thread about something all arguments pro/con were already exchanged numerous times before? Each one here has his opinion, each one knows the others opinions --- and each one knows that he can´t convince the other side. What a waste of time and energy (of writers AND readers).

<<If I had to guess, I'd guess slower growth<<

Perhaps, but I'll predict much better per share progress. And as shareholder that's what matters to me.

There's a ton of low hanging fruit in improving the op cos. Berkshire is a collection of op cos that also owns cash and stocks. And the guy running the operating companies formally takes over with full authority. Look for improvement in most operating companies' results, and the outright sale of some others. That will move the earnings needle in a major way.

I also expect that a third of the company won't rest comfortably earning 4% like it does now. Talk about low bars.

So sure--top line growth may not be robust, but I expect profit growth to improve and rather dramatically from this base line. Warren has set up Abel just beautifully.

" These days, when the sales commission is zero for almost everyone, it makes absolutely no economic sense to pay dividends. But hey, the rubes are still out there.

Elan"


Buffett is a, " rube" for buying those Japanese stocks? Oh my.

You really are doing your best to look dense. I buy some dividend paying stocks too, because I think they are good investments, NOT because they pay a dividend. The dividend, in such cases, is an unavoidable nuisance.

"Also I have yet to read a post here where someone wrote that dividends are "free money." No idea why "experts" keep mentioning that. Also wonder why the "experts" aren't contacting CEO's, attending shareholders meetings, etc. and speaking up about how misguided it is to pay a dividend. The only place one reads that is on this board...UCMTSU."

It looks like some people can only see black or white. No grey.

It isn't necessarily nor always misguided for a company to pay a dividend (I have yet to see anyone here actually argue that). However when the whole point of what the company does is rationally allocating capital, then dividends are much harder to justify. Most people here have no problem with OXY, XON, or KO sending a dividend to shareholders. Those companies are in the oil or sugary water business, not the rationally allocating capital business.

Most people here have no problem with OXY, XON, or KO sending a dividend to shareholders. Those companies are in the oil or sugary water business, not the rationally allocating capital business.

First, I'll state that I'm a Umm fan. But that doesn't mean we can't disagree on some things.

Circa 40% of XOM's investors are individuals. Many of them are retirees who invested in XOM stock over their long careers (and became multi-millionaires - the average career in XOM is around 30 years). The rest are individuals with a similar goal. That happens to be the top priority of XOM to shareholders - to deliver a safe and growing return over an extended period. They have now delivered an annual increase for over 40 years. Their shareholders enjoy a return competitive with, usually better, government bonds. Plus they enjoy the prospects of capital returns that bonds don't offer except in interest rate swings. There's a big chunk of people that want this kind of investment.

XOM management clearly spells out their investment priorities.

First is to continue to invest in projects that meet or exceed their hurdle rates - AND with a competitive advantage that permits them to ride through the cyclic nature of all economies. This is necessary because existing O&G fields steadily deplete. New projects are needed to offset this depletion. In turn, this permits the safe and growing dividend over long periods.

The next priority is a very strong balance sheet to, again, ride through the cycles and sustain the dividend.

The third priority is a competitive dividend with annual growth.

The final priority is stock buybacks when cash flow exceeds the above priorities, This can fluctuate over market cycles.

ExxonMobil is a counter-cyclic investor. Their projects usually have a life time measured in decades. They continue to invest when O&G prices are low because that's when attractive projects become available at attractive prices. They also sustain projects during these periods. That is a powerful incentive to service companies and other suppliers - and in turn offers good price contracts that cover an extended period forward. (I hear they even have gas turbines for new gas plants now.)

That strategy continued during the Covid crisis, and severely tested the no dividend cut policy. But they survived it. They took a lot of heat from Wall Street since others were cutting dividends and pausing capex. But XOM has outperformed their competitors since the crisis. Wall Street has acknowledged that their strategy was correct.

I was doing strategic planning when I retired 31 years ago. XOM was working hard to optimize this counter-cyclic strategy even then, and had done so for years. They've continued to optimize it for these three decades since.

Somehow I find all this a very rational capital allocation strategy for a certain segment of society. An anecdote. A good friend of mine was at Lee Raymond's retirement party. When they visited he told Raymond that his mother never asked him about the stock price, just the dividend. Lee told my friend that those are the people he thinks about every morning. Darren Woods, the current CEO, always talks about his responsibility to the individual shareholders. (Maybe somewhat like Buffett and his sister?)

There are certainly alternates. Berkshire under Buffett just waited out the cycles when prices got too high. They had a different group of shareholders who preferred the no-dividend, wait until you can buy low strategy. I'm one of them in addition to being an XOM shareholder. Rather that the 60/40 equities/bonds strategy recommended by many as you age, I let XOM substitute for the bonds.

Maybe this is just another example of my having outlived my time. Hell, I even still take a paper newspaper and refuse to let my life be dominated by a smart phone. It took a long time and lots of pressure for Buffett to cave in - maybe because it was free and he loves bridge?

Tex

...to deliver a safe and growing DIVIDEND over an extended period.

My apologies - dividend, not return although that's needed too. No matter how many times I proof-read, I alway mistype something. This time it happened to be the primary subject of the post.

Because their shareholders aren't as smart as BRK shareholders?
...
Don't you think if there was as much demand for a dividend paying BRK share that an ETF would have opened up which owned more or less nothing but BRK and paid a dividend?

There was a company a few years ago that had two share classes.
One class got the dividend paid in cash.
The other class got shares worth the exact same amount.

More people owned the 1st class than the 2nd class.

If the people in the 2nd class immediately sold those shares as soon as they receive them, they would get more cash than if they had the 1st class.

IIRC, the difference in price between the 2 classes was about 10%.

Owning the 1st class instead of the 2nd class was financially dumb. They gave up dollars just for the warm feeling of getting cash money. Worse, if they reinvested the dividends -- which a lot of people do -- they received fewer shares (in value) than the 2nd class got.

This persisted for YEARS. Management railed against the illogic of people preferring the 1st class for YEARS. Finally they threw in the towel and merged the two classes into one.

I collected literally free money for quite some time by owning the 2nd class.
The people who owned the 1st class got the illusion of free money at the cost of losing ACTUAL free money.

"Most people here have no problem with OXY, XON, or KO sending a dividend to shareholders. Those companies are in the oil or sugary water business, not the rationally allocating capital business."

Yeah, the way I said that came out wrong. I did not mean any insult by that to OXY, XOM, or KO or their shareholders.

What I should have said is that Berkshire is in the capital compounding business.

Word matter and I used the wrong ones.

Great post, TexIrish!

Loved that personal story about Lee Raymond and the dividends. You’ve aligned yourself with people of high integrity and it’s paid off in many ways. The money part takes care of itself.

Quite similarly, Warren reportedly worries constantly about the responsibility of taking care of his shareholders—many of modest means—who’ve entrusted large portions of their life savings with him.

Connect with smart people of high integrity who treat shareholders like partners. It’s worked out well.

Merry Christmas to you and your family, hope all is well!

Hell, I even still take a paper newspaper and refuse to let my life be dominated by a smart phone. It took a long time and lots of pressure for Buffett to cave in

I refused a long time to even own a mobile phone. My aged father though loved his tiny Nokia. And was always amused when he wanted to know how to do this or that with his phone, me saying "Give it to me", fiddling around a bit and then me, the computer expert, returning it with "I have no idea". One day when visiting him he gave me a Nokia with the words "Son, you must have one". My father´s present, so I couldn´t reject it.

No matter how many times I proof-read, I alway mistype something.
You just did it again :) And I wrote in my last post "in my table club after practicing", leaving people wondering what a "table club" is (table tennis club).

Those companies are in the oil or sugary water business, not the rationally allocating capital business.

On this we disagree, and I’ll pick a nit.

Every business, large or small, from US Steel to the local dry cleaners is in the “capital allocation business”. Should he buy one of those fancy racks that whirl the clothes on a track around or not? New dry cleaning or washing machine? Paint the exterior of the building? And so on.

Yes, it’s very different when your *only* business is capital allocation, like Berkshire, but sweeping generalizations are never right ;)

Ha ha, I make a joke.

> You really are doing your best to look dense. I buy some dividend paying stocks too, because I think they are good investments, NOT because they pay a dividend. The dividend, in such cases, is an unavoidable nuisance.

I think the BRK dividend discussion is an interesting one, but the problem is a chunk the discussion here is dominated by someone who doesn't discuss things nicely.

A dividend, in general, is a good thing. It instills capital discipline, works against empire building in a company, and makes accounting fraud more difficult.

I'd always rather have a company that has more opportunities to deploy cash on hand at a higher than market rate of return. Railroads, resource extraction, real estate, and a few others are natural industries where dividends are almost inevitable. But there are some other companies that have a finite niche and hit their ceiling, and they just offer a nice ROIC on that business. But additional investment won't increase the size of their target market or make them more efficient. I'm happy when they decide to periodically return cash rather than making the company worse. I am *not* happy when they prioritize the dividend over the health of the business, and I wish European style non-fixed dividends were the rule here.

So the question for me is thinking if BRK falls into the former or latter category. The insurance float and the t-bill situation is a function of an over-leveraged and unhealthy market. I see no indication they have saturated the investing niche they occupy.

A dividend for the sake of a dividend is just dumb. I think a variable dividend on B shares could be interesting, but unlikely. A small fixed dividend on only B shares targeting 10-25% of the cash flow generated by the non-financial operating businesses may help avoid prevent BRK turning into a poorly run diversified conglomerate over time. But I see no large benefit that would be unlocked by doing so, and I think doing this right after a management transition would be foolish (in the bad sense).

SIRI, which happens to have a 5+% dividend, is a position that Ted Weschler continues to increase. I have no idea as to what he sees in it nor have I read/heard anyone else come up with good reasons for doing so. I don't think he is buying it because of the dividend.

The question is my mind is, "As a shareholder do I want to see both Greg and Ted being completely in charge of investing several hundred billion dollars?"

Of course per the "experts" here shareholders have no right to know what is being bought or why as well as what the portfolio manager's performance record is. UCMTSU

I should add that I like Greg and think he will do surprisingly well with acquisitions in the $1 to $10 billion range. As previous posters have emphasized in some excellent posts he is also quite likely to "crack the whip" on many of the fully owned businesses and margins should increase.

story about Lee Raymond and the dividends. You’ve aligned yourself with people of high integrity and it’s paid off in many ways. The money part takes care of itself.

Quite similarly, Warren reportedly worries constantly about the responsibility of taking care of his shareholders—many of modest means—who’ve entrusted large portions of their life savings with him.



Both CEOs can be admired for thinking about their shareholders, but the difference is that one group of shareholders being thought about (the XOM ones) seem to be wishing for something irrational, the illusion of getting more income from a reliable investment just because it pays a steadily growing dividend, while the others being thought about (the BRK ones) are wishing for a maximal TOTAL return, with or without dividends. If Exxon has great opportunities to reinvest earnings at certain points of its cycle, but foregoes those investments in order to steadily increase the return of capital, he is impoverishing the people he is supposed to be working for. The fact that that is what they want is some consolation, I suppose, but it is not as satisfying, and it means the other Exxon shareholders who just want a comfortable retirement are being sacrificed in order to satisfy shareholders who haven't understood that they can generate whatever dividend they need by selling a few shares.

So I admire both CEOs but I admire more the CEO who caters to a rational wish and maximizes their prosperity, compared to the one who caters the irrational wish, but at the expense of their prosperity.

dtb

hc:
WHY eliminate that potential demand for your security, because you want to avoid a small taxable event?

There are people who think alcohol is bad for them. Some of them won't drink any and its not as bad as it used to be, but will resist the social pressure to have a drink in various situations. It must be tough on people who have to socialize for a living, which seems to be sort of what some kinds of sales people have to do.

There are others who will put the cup out in front of them and hold it to their lips when a toast is called.

The dividends paid by the tech companies seem to be in the 0.2% to 0.5% per year range? Can you think of ANYTHING more symbolic instead of substantial than that? Try leaving a 0.5% tip next time you eat out if you don't understand what I am talking about.

In clearer language. The mag 7 etc I think agree with not paying a dividend. So they pay their 0.2% to 0.5% carrying fee on their stock to get everybody to just shut up about it. BRK doesn't give a firetruck whether you shut up about stupid s#i% or not so they won't bend the knee. There's a lot of other stupid stuff they won't do, too. You might even say, not doing stupid $h!t is their brand.

And constantly trolling about it is your brand. And pretending I am somehow outside of and above the system so I'm not really being trolled is my brand. And being actually smarter than everybody else while actually being most genteel in his communication style is Mungofitch's brand. And believing in Free Will is Ben Shapiro's brand.

But I digress, which I like to think is part of my brand also.

R:

Also wonder why the "experts" aren't contacting CEO's, attending shareholders meetings, etc. and speaking up about how misguided it is to pay a dividend. The only place one reads that is on this board...UCMTSU.

This one is super easy.

If you don't like the fundamental decisions that a publicly traded company is making, DON"T INVEST IN IT. I don't even try to explain to waiters how they could have served me better, not my job to train them. So I'm going to go up against a board?

The fact that publicly traded shares generally come with voting rights is an irrelevancy to 99.999% of investors, because it is 0.001% of investors that own enough shares to make a difference. And 78% of statistics are made up on the spot, so don't go checking my facts, or if you do, at least post the right numbers.

R:

PS, this doesn't mean if you don't care about dividends you "can't" buy dividend paying stocks and still be internally consistent. I invest in the companies I think are going to make me the most money. I do not invest in companies because they pass some checklist of correct positions. That would be dumb, too. The solution to dumb things is not more dumb things. -R;)

" Of course per the "experts" here shareholders have no right to know what is being bought or why as well as what the portfolio manager's performance record is. UCMTSU."

IF Buffett still had not authorized a buyback is there any doubt in your mind that the same old timers would still be posting that brkb doesn't need no stinkin buyback because Buffett can invest our cash in better ideas?

We should respect, consistency.

hc:
IF brk declared a 1$$ a B share quarterly dividend to yield a bit below 1 percent brk would be a compelling alternative to the very high risk SPY, based on its current concentration and valuation.

I'd like to think my response will surprise you: you are probably right.

What would float my boat would be if the tax law changed so that those who reinvest dividends programatically could opt to accumulate the dividend payouts on their cost basis instead of paying current taxes on them.

Then both sides of the argument could have their dividend and tax deferral as well.

I'm all about the solutions baby. I have a million dollar idea AT LEAST once per week.

R:)

“ I'd like to think my response will surprise you: you are probably right.“ Are you trying to get excommunicated from Brkville or even worse? Bro, I have an idea too, what if American politicians weren’t bought and paid for and there was a ten percent tax on buybacks with the proceeds targeted to build low cost housing? Would that increase the odds of capitalism as we enjoy it surviving past the 2028 elections? Thank you for your attention to this matter.

Right up until the time the buyback was announced the experts were still mightily opposed to it. For quite a while even Rational Walk bought that "it would be taking advantage of shareholders" nonsense. He's a smart guy and to his credit he finally did change his mind. The same was true about splitting the stock. The experts repeatedly told us that it would never happen....who can forget Toddfinances classic pizza comparison?

I think the dividend is inevitable...only thing we don't know is when. At that time BRK will almost certainly still have $300+ billion in cash. Being that BRK is by far my largest position what I'm doing is looking ahead and thinking about how a dividend will change my income, tax situation, etc. so that I'm reasonably prepared for it. If it does not happen then so be it...my only loss is the time spent running thru the "what if" scenarios. If no dividend and we have another bad market downturn (think economic collapse in 2007 and the pandemic) I will feel really bad for the individuals that bought into the "create your own dividend" strategy. Someone just hitting retirement age and having to create their own dividend for an extended period of time is not going to do so well.

If no dividend and we have another bad market downturn (think economic collapse in 2007 and the pandemic) I will feel really bad for the individuals that bought into the "create your own dividend" strategy.

Studies & backtests have repeatedly shown that this is not the case.

The testfol.io link I posted earlier showed this.
Was that on this board or another board? I don't remember.
So, anyway, here is a new backtest. 4% "DIY dividend" quarterly, adjusted for inflation. https://testfol.io/?s=b10hGQKc7NK (click "Logarithmic scale" on the chart)

SPY, BRK-B, GAM (who??), all beat KMI. Ditto for 5% dividend ($125/qtr).

Can't show the 2008/2009 crash since KMI doesn't go back that far. But for the covid crash starting 2/20/2020 the DIY dividends of those three also beat KMI. https://testfol.io/?s=4yr3Zcds6wJ

Gotta go, grandkids are ready for Christmas Eve.

" Being that BRK is by far my largest position what I'm doing is looking ahead and thinking about how a dividend will change my income, tax situation, etc. so that I'm reasonably prepared for it."

relax rabbitrr, since you are a rare breed in brkville think about this. 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? Shockingly, Buffett still doesn't understand this concept, hence for a decade plus he has been selling off his life's work via the foundations, too cheap! Sadly, brkb aka, we weren't the buyers of foundation sales 50 % lower, in size.


Do you think 5 of the Mag 7 pay a dividend to DECREASE demand for their common? This isn't complicated, someone is very wrong.


btw, rw does support the buyback and he agrees a quarterly div might be about 18 months away.

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.

55 posts to respond to somebody who has posted the same thing in more than one location for literally years! Those who respond are just feeding his monomania. All of you can learn not to respond, perhaps.

Jk

HC,

It took RW quite a while to agree that buybacks were actually a good thing.

Only in "expertville" will they tell you what a bad idea it is to receive money now. If you need income even in times when the stock is lower in value then sell some of your shares....create your own dividend!! Just a general thought, is it ever a good idea to sell shares of a stock that is currently depressed in price and at the same time creates a taxable capital gain?

The "create your own dividend" was thought of by WEB. Unfortunately it's a "do as I say" idea as opposed to "do as I do." It's safe to say that WEB has never been in a financial position where he's needed to sell any shares for income purposes.

“ HC,

It took RW quite a while to agree that buybacks were actually a good thing.
“ When a public company announces that it has increased its authorized buyback and raised its dividend does it trade up or down on that news? When the Mag 5 authorized a very small dividend did their stocks trade up or down on that news? I no longer respond to most of the deep thinkers. Thank you.

“However, if you are truly willing to pay 1/3% each year in return for a [one time] 2% increase in [price]…”

Well reasoned, Mark.

<<Only in "expertville" will they tell you what a bad idea it is to receive money now. If you need income even in times when the stock is lower in value then sell some of your shares....create your own dividend!!>>>

I disagree. Buffett’s method allows me to take big lumpy dividends from other, less price/value conscious folks, when the stock is very expensive or, more frequently, when it serves MY purpose of filling up IRMAA brackets or using up lower tax brackets. Berkshire serves ME this way. Far more preferable.

When Berkshire is cheap— I don’t take a dividend or I choose a small one. MY choice.

As to your other point…I choose to live my life so I’m never forced to take a large dividend when I “have to” because I need the cash. And even if I did…it’s no big deal at all.

HC,

When you read the rebuttals that by not paying a dividend now one will receive far more $ at some future date (hopefully the case as I am a stockholder) keep in mind that what is not being mentioned is "present value." If I give you a $1 today it is probably going to be worth far more than the $1 I give you 20 years from now. That future amount of $ needs to be discounted back to the present by the discount rate that one feels is appropriate and/or comfortable with.

Also as has been mentioned there are number of shareholders who are very fortunate to be in a financial situation where it really doesn't matter if they receive the dividend...I'm grateful every day that I am among them but I also think that the interests of stockholders who are not in that position should at least be considered. I don't believe that telling someone to "just sell your shares and create your own dividend" is a good strategy (especially in a depressed market) and the common reply here that "one should not allow themselves to be in that position" is hard for me to swallow.

Lastly if one did receive the dividend $ today they have the option of investing it in something else. If one were to use that $ to invest in something that were to outperform BRK it's very possible they would end up with far more $. Even if the $ were placed in a money market fund there would be an additional amount of income that would need to be factored into the comparison.

“ When you read the rebuttals that by not paying a dividend now one will receive far more $ at some future date (hopefully the case as I am a stockholder) keep in mind that what is not being mentioned is "present value." If I give you a $1 today it is probably going to be worth far more than the $1 I give you 20 years from now. That future amount of $ needs to be discounted back to the present by the discount rate that one feels is appropriate and/or comfortable with.”

I’m reminded of that famous exchange between Warren and Charlie. Paraphrasing:

Charlie: Warren talks about discounted cash flow analysis, but I’ve never seen him do one.
Warren: Some things you only do in private, Charlie.

You don’t need to do the math if it’s obvious at first glance.

"Charlie: Warren talks about discounted cash flow analysis, but I’ve never seen him do one."

I think Warren did these in his head because it was never that close to require decimal point precision.

It took RW quite a while to agree that buybacks were actually a good thing.

But this isn't true. It's not [always] a good thing, and it's never the best thing. The best thing is to find good companies that are valued fairly and that you think will go up nicely over time ... and to buy them (the entire company or shares in the company). If there is nothing at all out there to buy, then perhaps, just perhaps, it might be "good" to do a buyback. But again, only if the valuation at the time of the buyback makes sense. If it doesn't make sense, then it isn't a "good thing" to do.

" HC,

When you read the rebuttals that by not paying a dividend now one will receive far more $ at some future date (hopefully the case as I am a stockholder) keep in mind that what is not being mentioned is "present value." If I give you a $1 today it is probably going to be worth far more than the $1 I give you 20 years from now. That future amount of $ needs to be discounted back to the present by the discount rate that one feels is appropriate and/or comfortable with."


Hi bud, as usual few here understand the issue. I don't need current income to help me pay the rent on my unfurnished Clayton double wide.

Splitting the Bs increased the required liquidity to be added to several indexes which increased demand.

Authorizing the buyback, increased demand.

Think back 25 years, who is currently bashing me for any recommendations I suggested the past 25 years, other than the current div proposal?

Most here already knew everything they needed to know about wall street 30 years ago, OR they can site what Buffett said 25 years ago, why bother.

Time to move on. I'm done with it; we will all invest accordingly. Best of luck.

I'm going to defend dividends some. If a company pays a dividend, it isn't engaging in Arthur Anderson/Enron/GE type accounting. You can't fake a dividend - you have to bona fide earn money and be profitable (well, in the long term) to make this work. Companies that have paid them for decades - some longer than even my long-departed grandpa had been alive (he held PG, which was my first stock, and PG has even *grown* its dividend longer than I have been alive) tend to be less prone to chaos, fads, whatever r/wallstreetbets is probably foolishly doing this week, and flim-flam of other flavors.

We know Berkshire is of high quality, despite no dividend. What about some other mega cap? Do we feel confident about, say, Tesla or NVDIA's balance sheet and earnings reporting and transparency and long running history?

You can't fake a dividend - you have to bona fide earn money and be profitable

Well, actually, no. Even legit companies have paid a dividend with borrowed money when they lost money instead of making a profit.

As is my wont, I plugged PG into testfol.io along with VFINX (S&P 500). To my surprise, over the longest lifetime, PG did (barely) beat the S&P 500. Although the S&P 500 has beat PG since 2009. https://testfol.io/?s=bvytK49P9XS

But since BRK's lifetime, it has handily beat both. https://testfol.io/?s=3yoU5a7uri5
$10,000 grew to $2M, $1.5M, and $26M, respectively.

I don't know for sure, but the superb performance of PG is probably the survivorship bias fallacy. Both BRK and SPY are broad based index investments. PG isn't.



Do we feel confident about, say, Tesla or NVDIA?
No.

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