Zero Dividend Policy Makes Sense at Berkshire Hathaway

(May 5, 1997) Warren #Buffett is asked by a shareholder why #Berkshire Hathaway model remains unique despite Berkshire Hathaway is successful and discloses its business model. Warren Buffett says that most investors do not like to follow the model of Berkshire Hathaway and Benjamin Graham because they don’t promise quick result. As an example, most companies do not follow the dividend policy of Berkshire Hathaway, which does not pay any dividend to the shareholder. The zero dividend policy is unpopular because most investors expect quick result (aka dividends) from their investment. On the other hand, Warren Buffett is confident that the money retained at Berkshire Hathaway will generate more wealth than he pays out as dividend.

 

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