"Big, diversified companies like Berkshire invariably pay dividends. If Berkshire had one, there would be huge demand for the shares from income-oriented investors.
A 1.5%-to-2% dividend wouldn’t be an extraordinary commitment for the company, and it would be viewed positively by many investors,” says Jim Shanahan, an analyst at Edward Jones who has a Buy rating on the stock.
Buffett has said Berkshire’s shareholder base doesn’t want a dividend and points to an overwhelming vote against one in 2014."
Other points like giving more money to the Ted & Todd and moving Greg into the CEO role have some merit IMO.
Buffett has written on dividends in great detail in the 2012 annual report. Pages 19 thru 22. I’ve actually been doing this since 1998. It works just fine.
There’s a post-Buffett scenario where Berkshire trades at a low valuation for a long time. New management might not be given the benefit of the doubt, and opportunities to prove themselves might be lacking. So Berkshire could drift down to close to book value and bump along.
After a few years of that the remaining loyal shareholders might be inclined to vote for a dividend. Though there wouldn’t be much surplus cash after the inevitable enormous buybacks.
(I wonder what a post-Buffett cash holding will amount to? Float? I digress.)
I don’t want a dividend. All our taxable is in Berkshire. A dividend would seriously upset my tax planning. But there are worse problems…
I would not mind a dividend, though I do not ask for one.
If Berkshire must pay a dividend, I suggest the board resume the existing dividend: $0.10 per A-share.
I would not mind a dividend, though I do not ask for one. If Berkshire must pay a dividend, I suggest the board resume the existing dividend: $0.10 per A-share.
Seems a reasonable compromise!
But hey, I could even go as high as that old 10 cent dividend, adjusted for inflation.
That would be $0.853 per A share.
Even if one were to accept the idea that a lot of shareholders want a dividend because they need some income,
one problem with dividends is never really discussed: it’s always the wrong amount.
Some people want no dividend. That’s often discussed.
But those who want a dividend are also not a homogeneous bunch.
Some would want a higher dividend. They’ll still have to do periodic sales just like the current situation, just less often.
Some would want a dividend, but a lower one. They’ll have tax bills they don’t want, just like the “no div thanks” crowd.
It’s not as if a switch to a dividend would make the whole dividend-seeking crowd happy.
Like it or not, dividend is coming. Just a matter of time. Now, they are returning all the cash generated by “operating companies” via buyback and at some point they will consider dividend. May be 2 to 3 years away.
At some point, Berky is going to need a new class of shareholders and most of Buffett A shares would be converted into B shares. Income seeking investors are very loyal investors. Rarely they ditch their companies.
If it is a return of capital, then you don’t get taxed and you reduce your cost of capital. For Berkshire, there are some long-term shareholders probably their cost of capital might go negative. Not sure how it works in such situation.
So long-term capital gains is less than taxes on dividend (for me at least). It is also one of the reason , companies buyback shares, instead of paying big dividends.
I’m a long term lurker, and now a very occasional contributor, to the BRK board. And I’ve seen the dividend distribution come up - many, many, times. Too damn many.
Why isn’t this issue settled?? The vast majority of BRK shareholders don’t want a divided. That would complicate their tax management.
And those that do can create their own, according to their own circumstances. Sell the amount of BRK you wish to create the dividend you wish. Pay the tax bill (usually long term.) Take your equivalent dividend. Fit the need to your own circumstances.
No one objects to that individual decision. Satisfy your self.
So why continue to suggest something else?? Let the rest of us alone.
A good part of my over-allocation came about specifically because of the lack of a dividend. For the self employed or early retired in the USA, the last few years of private health insurance before Medicare kicks in can be brutal. Over the course of few years my insurance went from $150 to $1500 a month. I realized that I could get it far cheaper if I eliminated enough income to qualify for Obamacare. I sold everything with dividends and became a poor ward of the state. My insurance dropped to $15 a month, in spite of owning things such as A shares and high value real estate.
By the time I had Medicare I had a good chunk of capital gains so I’m still over weight BRK.
I defer all the income I can for the same reason. Under the current covid rules, in 2021 & 2022, your health care cost is limited to 8.5% of your AGI. So my $2000 healthcare monthly bill is now more like $1000.
Yes, I am on the same page. I did not know about the health care cost cap, thanks. In process now looking at potential early retirement ACA individual policies which are income based- appears family coverage still as high as $2K/ month, $8700 ded- higher than I had expected!
The costs are high,but the subsidies are as well if you stay under the cap. I believe it is 400% of the poverty line in most years,with a cliff. 2022 is different and perhaps 2023 as well,not sure, at 8.5% of income. Prior to retirement,confirm what constitutes ACA income,and plan accordingly.
We will have 7 years of subsidy prior to medicare,and planned to spend down brokerage accounts and top off with Roth assets to stay under the cap easily.We do live in a lower cost of living area without a mortgage,so that simplifies things.
And those that do can create their own, according to their own circumstances. Sell the amount of BRK you wish to create the dividend you wish. Pay the tax bill (usually long term.) Take your equivalent dividend. Fit the need to your own circumstances.
The biggest issue is that the stock price can stay low (ie: below ‘fair value’) for a long time; and during that time if you are selling to raise cash you are diluting your value. With a dividend (which I am not in favor of - but for other reasons) you can be confident that your income stream is steady.
I’m 62, retired and living off Berkshire. With regards to health insurance I have a high deductible plan for $373 per month which I pair up with a Health Savings Account where I contributed $4600 in 2021 which I use for medical expenses and the entire $4600 can be deducted on my taxes.
My wife is older than I and on Medicare and our daughter has benefits through her employer.
If your healthy as I am (so far anyway) its not a bad option until medicare.