Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Warren Buffett and dividends (Jan 18, 2012)

As far as I know Berkshire Hathaway /BRK.A/ paid dividends only once when Warren Buffett (NASDAQ:WB) left for a restroom during annual meeting. Many dividends opponents refer to WB anti-dividend policy in order to criticize dividend-oriented investing.

WB is right about tax disadvantages of dividends and he was probably right with his dividend attitude about 30 years ago. But I think he is wrong during past 20 years. Let me explain why I think WB approach to dividends should be different now.

In order to make difference in BRK.A performance WB needs to invest around $5 billion in a good company. So his investment universe is limited to big companies only. In order to make difference in Average Joe (AJ) performance probably AJ needs to park around $100 thousand in a good company. Even if AJ is not as good capital allocator as WB it is much easy for AJ to find a good investment between big and small companies than for WB.

Therefore, I think WB should be more friendly to AJ and BRK.A should pay dividends, e.g. a fixed percent (at least 10%) of earnings.

Disclosure: I do NOT own BRK.A and BRK.B because they do not pay dividends.