A:

Berkshire Hathaway (BRK-A, BRK-B) does not pay a dividend because its chairman and CEOWarren Buffett, believes it is more beneficial to allocate the company's earnings in other ways. In particular, Buffett prefers to reinvest profits in things that allow his company to improve its efficiency, expand its reach, create new products and services as well as improve existing ones, and further separate itself from competitors. Buffett, like many business leaders, feels that investing back into his business provides more long-term value to shareholders than paying them directly because the company's financial success rewards shareholders with higher stock values. While the company does not pay a dividend, it does however have a prudent stock buyback policy that works to put cash directly into shareholders' pockets.

Despite the company having billions of dollars of cash on hand, the prospect of a Berkshire Hathaway dividend is dim as long as Buffett is in charge. The company has paid only one dividend during his reign, in 1967, and Buffett later joked he must have been in the bathroom when the decision was made. Nevertheless, statistics give credence to Buffett's stance that using profits to buttress the company's financial position results in greater wealth for shareholders than paying dividends. Berkshire Hathaway's BRK-A increased by almost 700,000% between 1964 and 2014. BRK-A and BRK-B are both reporting annualized ten year returns of 10.94% respectively as of October 12, 2018. (See also: Berkshire Hathaway Stock Prices)

RELATED FAQS
  1. Why does Warren Buffett largely avoid investing in the technology sector?

    Learn why Warren Buffett has traditionally avoided investing in technology companies, and read about his value investing ... Read Answer >>
  2. What's the largest charitable donation Warren Buffett ever made?

    Learn about Warren Buffett's biggest financial contributions and how his estate is to be divided between charity and Buffett's ... Read Answer >>
  3. How is Warren Buffett Plan bequeathing his estate?

    Find out how much Warren Buffett is leaving for his heirs and how he wants the funds invested after his death. Read Answer >>
  4. Warren Buffett's history in school

    Warren Buffett attended multiple prestigious schools on his path to success, but he places much more significance on real-world ... Read Answer >>
  5. Why did Warren Buffett invest heavily in Coca-Cola (KO) in the late 1980s?

    Discover why Warren Buffett found Coca-Cola an attractive investment in 1987. One criteria of a Buffett stock pick is a moat ... Read Answer >>
Related Articles
  1. Insights

    Who is Driving Berkshire Hathaway's Management Team? (BRK.B)

    A look into Berkshire Hathaway’s core management team and how they work together to deliver consistent returns over the long term.
  2. Investing

    Always Bet On Berkshire Hathaway (And Here's Why)

    With its share price at an all-time high amid talk of a stock market correction, why would anyone buy Berkshire Hathaway shares?
  3. Investing

    What Will Become of Berkshire Hathaway Beyond Buffett?

    Warren Buffett, who has become almost synonymous with the term “investor,” remains robust, but at 83 is clearly somewhere in the fourth quarter of the game. What does that mean for Berkshire ...
  4. Investing

    Berkshire Hathaway Stock Prices

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  5. Investing

    Is Berkshire Hathaway Stock Undervalued? (BRK-A)

    Find out why Berkshire Hathaway stock may be undervalued when the company has an overall growth business, something that should support a premium valuation.
  6. Investing

    Buffett: I'd Pull the Trigger on a $100B Deal

    Cash is the world's worst investment, said Buffett, except for doing 'something dumb' long term.
  7. Investing

    What Does Warren Buffett Own? (BRK.B, PSX)

    Learn about a few underrated stocks Warren Buffett owns in his Berkshire Hathaway portfolio.
  8. Investing

    A Look At Berkshire Hathaway's Many Components

    Berkshire Hathaway has 59 wholly owned subsidiaries and owns big stakes in several huge companies. Just how do those pieces fit together?
  9. Investing

    Berkshire Hathaway Has Almost $100B in Cash

    The company could make acquisitions, but the market's bull run is a deterrence.
  10. Investing

    Berkshire Hathaway Shifts Strategy Away from Stock Picking

    Warren Buffett seems to be changing his approach, which has traditionally relied on excellent stock picks.
RELATED TERMS
  1. Baby Berkshire

    Baby Berkshire is the 50:1 stock split after the market closed ...
  2. Holdings

    Holdings are the securities within the portfolio of a mutual ...
  3. Cash Dividend

    Cash dividend is the money paid to stockholders normally as a ...
  4. Dividend Rate

    The dividend rate is the total expected dividend payment from ...
  5. Current Dividend Preference

    A safety feature that is offered to a company's preferred shareholders, ...
  6. Stock Dividend

    A stock dividend, also known as a scrip dividend, is a dividend ...
Trading Center