Berkshire Hathaway pay dividends
Berkshire Hathaway: is the dividend coming after Warren Buffett?
At Berkshire Hathaway, long-term Foolish investors have to prepare for a scenario: a phase after Warren Buffett. Meanwhile, the Omaha Oracle has finally begun the decade of its life. Charlie Munger is even older, so the two star investors will no longer manage the affairs of the holding company forever.
This leads to a lot of speculation: For example, who might succeed Berkshire Hathaway and Warren Buffett. A question that is perhaps the easiest to answer for many investors. Greg Abel and Ajit Jain are hot aspirants for this job.
There is another exciting speculation now, however: whether Berkshire Hathaway could pay out a dividend after Warren Buffett. A scenario that a US stock market magazine has now brought into play.Berkshire Hathaway: after Warren Buffett the dividend?
Basically, we should first say a few things: Warren Buffett is not entirely against a dividend at Berkshire Hathaway, on the contrary. His approach is even based on cash-flow-intensive business models, which often result in a payout. However, the Omaha Oracle does not want to pay a dividend because the star investor believes it can use the money better. And because distributions are not tax-advantageous for investors.
However, according to a report by MarketWatch, a dividend after Warren Buffett's time at Berkshire Hathaway could be an option. Accordingly, one of the tasks of a new CEO is to use the large mountain of cash and possibly return it to the investors. A task that payouts could help with.
Share buybacks are still the primary way in which the investment company is likely to return a significant portion of the capital to investors in the future. Warren Buffett's successors are unlikely to destroy his legacy in full. However, a dividend, such as 25% of normalized and adjusted earnings per share, could be an option. Really an interesting thesis.
Whereby this opinion is classified as one: as an opinion on what will happen after the oracle of Omaha. It is accordingly a matter of speculation.Whether the dividend will come is questionable ...
It is an exciting scenario that the editor shows here. However, one that is extremely arguable for me. Whether the dividend will really come after Warren Buffett at Berkshire Hathaway can also be viewed with skepticism. Especially since the long-time functionaries of the holding company are likely to have soaked up the DNA of investing in the Omaha Oracle.
In addition, one scenario seems more likely to me. Should Warren Buffett retire from Berkshire Hathaway (or something), the share price could plummet significantly. It is absolutely probable for me that the oracle of Omaha prepared for this scenario and ordered a course of action. The risk and a possibly lower share price could ultimately be ideally used for share buybacks.
A dividend may therefore be an option, but it has become a tradition at Berkshire Hathaway to forego it. According to Warren Buffett, this could be an ideal time to invest a large amount of cash in your own stocks. This could perhaps directly reduce the problem of the cash mountain.
The Berkshire Hathaway article: Will the dividend come after Warren Buffett? first appeared on The Motley Fool Germany.
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Vincent owns shares in Berkshire Hathaway. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short June 2021 $ 240 call on Berkshire Hathaway (B shares), short January 2023 $ 200 put on Berkshire Hathaway (B shares), and long January 2023 $ 200 call on Berkshire Hathaway (B shares).
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