Warren Buffett has long avoided paying a dividend on Berkshire Hathaway stock. But this could change.
For decades, many investors have called on Berkshire Hathaway (BRK.A 1.85%) (BRK.B 1.61%) to pay a dividend, but Warren Buffett has refused to authorize one.
Why doesn't Berkshire pay a dividend? Will it ever?
Berkshire stock could pay a dividend if this 1 thing happens
The only time Berkshire ever paid a dividend was in 1967. The payout was $0.10 per share. At the time, Berkshire had only one share class. "It was a terrible mistake," Buffet later conceded. That's because if Berkshire had reinvested the capital instead of paying it out, it would be worth significantly more today. Since Buffett took over the company, shares have risen in value by an average of nearly 20% per year, roughly double the rate of the S&P 500.
This is the main reason Buffett hasn't authorized another dividend: He believes investors are simply better off having him and his team invest the capital.
Repurchases are consistent with that philosophy. When Berkshire buys back shares, that increases the value of each share held by outside investors. And unlike some dividend income, repurchases have no tax implications.
Right now, Berkshire is sitting on one of its biggest cash piles in history. Last quarter, the company reported $189 billion in cash -- a clear sign that Buffett and his team are having a difficult time finding bargains in today's market. Buffett has turned to share repurchases to absorb some of this excess capital, buying back $9.3 billion in shares in 2023. But share repurchases will only be authorized if they create value for shareholders -- that is, if the intrinsic value of the shares is above the market price.
This brings us to the only scenario in which Berkshire might ever pay a dividend: if the investment team finds no suitable investment options and Berkshire's own stock is overvalued, ruling out share repurchases. To date, this combination has yet to happen, and Buffett has never revealed his intentions should this situation ever arise. But given his unwavering commitment to creating shareholder wealth -- whatever the means -- stranger things have happened.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
FAQs
When is Berkshire Hathaway B dividend payment date? Berkshire Hathaway B (BRK.B) does not pay a dividend.
What is the dividend for BRK B in 2024? ›
The current TTM dividend payout for Berkshire Hathaway (BRK.B) as of September 06, 2024 is $0.00. The current dividend yield for Berkshire Hathaway as of September 06, 2024 is 0.00%.
Is brk b stock a good long term investment? ›
A)(NYSE: BRK.B) stock has proven to be one of the best-performing investments of all time. Since 1980, shares have increased more than 2,000 times in value.
What are the three dividend stocks for Motley Fool? ›
Key Points
- AbbVie is a Dividend King with solid growth prospects.
- Merck's looming patent cliff isn't as alarming as it might seem.
- Pfizer offers a high dividend yield and lots of upside potential.
Warren Buffett doesn't like stock splits and won't ever split Berkshire Hathaway's (NYSE:BRK-A, NYSE:BRK-B).
What is the 10 year return on BRK B stock price? ›
Returns
| Time Frame | BRK.B | Sector |
|---|
| 1-Year Return | 31.81% | 32.46% |
| 3-Year Return | 66.6% | 18.89% |
| 5-Year Return | 133.97% | 69.8% |
| 10-Year Return | 244.97% | 195.63% |
4 more rowsClass A shares historically tend to slightly outperform Class B shares, though this is by no means a guaranteed outcome in the future. Class A shares offer a long-term investment but little chance of a stock split down the line. Investors looking for flexibility might prefer to invest in Berkshire's Class B shares.
What is the outlook for BRK B? ›
Based on 3 Wall Street analysts offering 12 month price targets for Berkshire Hathaway B in the last 3 months. The average price target is $477.00 with a high forecast of $506.00 and a low forecast of $448.00. The average price target represents a 3.83% change from the last price of $459.42.
What will BRK B share price be in 2025? ›
$486.24 ↑5.84% Estimated share price by August 26, 2025.
How safe is BRK B stock? ›
We continue to believe that Berkshire Hathaway BRK. A/BRK. B, owing to its diversification and lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial-services sector and remains a generally solid candidate for downside protection during market selloffs.
Berkshire Hathaway has consistently outperformed the S&P 500 since 1965.
Is Berkshire Hathaway Class B undervalued? ›
Fair Value Estimate for Berkshire Hathaway
With its 4-star rating, we believe Berkshire Hathaway's stock is undervalued compared with our long-term fair value estimate of $427 per Class B share, which is equivalent to 1.45 times our estimate of the firm's book value per share at the end of 2024 and 1.35 times for 2025.
What is the rule of 72 Motley Fool? ›
Applying the Rule of 72, you simply divide 72 by 10. This says the investment will need to go up 7.2% annually to double in 10 years. You could also start with your expected rate of return in mind. Perhaps you expect a stock to go up in value by 15% annually.
What stocks are Motley Fool recommending? ›
The top 10 stocks to buy in September 2024
- CrowdStrike (CRWD 0.08%), $58 billion.
- PayPal (PYPL 0.67%), $66 billion.
- Airbnb (ABNB 1.82%), $72 billion.
- Shopify (SHOP 1.67%), $89 billion.
- MercadoLibre (MELI 2.21%), $96 billion.
- Walt Disney (DIS 0.46%), $156 billion.
- Intuitive Surgical (ISRG 1.6%), $165 billion.
Three of the safer ones you can put in your portfolio today are Abbott Laboratories (ABT -0.37%), Procter & Gamble (PG 0.35%), and Enbridge (ENB 0.59%).
How come Berkshire Hathaway doesn't pay dividends? ›
Since Buffett took over the company, shares have risen in value by an average of nearly 20% per year, roughly double the rate of the S&P 500. This is the main reason Buffett hasn't authorized another dividend: He believes investors are simply better off having him and his team invest the capital.
Has Berkshire Hathaway ever paid a special dividend? ›
The only time Berkshire ever paid a dividend was in 1967. The payout was $0.10 per share. At the time, Berkshire had only one share class. "It was a terrible mistake," Buffet later conceded.
Why would someone buy BRK a over brk b? ›
Class A shares historically tend to slightly outperform Class B shares, though this is by no means a guaranteed outcome in the future. Class A shares offer a long-term investment but little chance of a stock split down the line. Investors looking for flexibility might prefer to invest in Berkshire's Class B shares.
Is brk b better than s&p 500? ›
Key Points
Berkshire Hathaway has consistently outperformed the S&P 500 since 1965. The Vanguard S&P 500 ETF has generated bigger gains over the past two decades when factoring in reinvested dividends. Berkshire Hathaway faces more unpredictable headwinds than the latter.
