If you're in the market for dividend income, good for you! It's hard to beat the power of dividend investing. Not only do you get a regular stock that will, ideally, grow in value over time, but it will also regularly plunk extra dollars into your investment account.
If you're retired, that retirement income can come in very handy -- without requiring you to shave off any shares. If you're a pre-retiree, you might just reinvest those dividends into more shares of stock. Better still, healthy and growing dividend-paying companies will generally increase their payouts over time.
It's reasonable to wonder whether Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) would be a good dividend-paying stock for you. It's certainly a terrific stock to own. It specializes in insurance, energy, and transportation, and encompasses many businesses owned outright (such as GEICO, Benjamin Moore, Dairy Queen, McLane, and the entire BNSF railroad), along with sizable chunks of other companies (such as Apple, American Express, Coca-Cola, and Bank of America).
Here's the catch, though: Berkshire doesn't pay a dividend!
Buffett does love dividends, though. Thanks to the shares of stock owned by Berkshire, the company collects more than $5 billion in dividend income annually. So why no dividends from the company? Well, remember that when a company earns income, it can do many things with it. It might use that money to fuel growth -- and that's why many young, faster-growing companies opt not to pay dividends. It might alternatively pay down debts, acquire other companies, buy investments, or repurchase shares. Buffett does like to repurchase shares when they seem undervalued to him, and he's famous for buying other businesses when he finds ones he likes available at a great or good price.
Buffett has explained that, essentially, when Berkshire has more cash than can be deployed in useful ways, it might initiate a dividend. But that might not happen for a long time. For now, the company was recently sitting on about $277 billion in cash!
Should you invest $1,000 in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $716,375!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 9, 2024
Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian has positions in American Express, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
What Is the Dividend Payout for Berkshire Hathaway? was originally published by The Motley Fool