Dividends Could Be On The Way For
Berkshire Hathaway Shareholders
Legendary investor Warrren Buffett hinted that Berkshire Hathaway (NYSE: BRK-A, BRK-B) may eventually pay a dividend to shareholders, according to accounts of the Oracle of Omaha's question-and-answer session at last weekend's Berkshire shareholder meeting.
Buffett said the day will come when Berkshire will not be able to effectively deploy 100% of its capital. That's a faint hint at a dividend, but the statement did leave room for the Wall Street Journal to say that is the closest Buffett has come to saying Berkshire will pay a dividend.
Of course, a Berkshire dividend will depend on the company's ability to generate free cash, something it really has no problem with, but Buffett did essentially say he is still feeling acquisitive, so we're not betting on a Berkshire dividend in the near-term. In fact, Buffett said he'd do a $10 billion deal if the right came along and that would put a dividend on the back burner.
What's interesting is that plenty of Berkshire shareholders do not want the company to pay a dividend, citing tax ramifications, yet it's doubtful these shareholders have been critical of most of Buffett's investment choices.
In fact, it's hard to name a company that Berkshire owns shares of that does NOT pay a dividend. So it's OK for Berkshire to own dividend-paying stocks, but not pay a dividend itself.
Berkshire holds equity stakes in more than 20 public companies and by our count, only two do not pay dividends: CarMax (NYSE: KMX) and WellPoint (NYSE: WLP).
Disclosure: no positions