For years, investors have been urging Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) to pay a dividend, but Warren Buffett has consistently refused. The only time Berkshire paid a dividend was in 1967, with a payout of $0.10 per share. Buffett later admitted this was a mistake, as reinvesting the capital would have been more beneficial in the long run.
Buffett’s main reason for not authorizing another dividend is his belief that investors are better off having him and his team reinvest the capital. Share repurchases are consistent with this philosophy, as they increase the value of each share without tax implications.
Currently, Berkshire holds a significant cash pile of $189 billion, leading Buffett to resort to share repurchases to absorb some of the excess capital. The only scenario in which Berkshire might consider paying a dividend is if the investment team finds no suitable investment options and the stock is overvalued, ruling out share repurchases.
Ultimately, Buffett’s commitment to creating shareholder wealth remains steadfast, and while the possibility of Berkshire paying a dividend is uncertain, his dedication to maximizing shareholder value through strategic investments is unwavering.