From Yahoo Finance: 2025-05-10 04:41:00

Warren Buffett, CEO of Berkshire Hathaway, plans to step down at the end of the year. Vice Chair Greg Abel is set to replace him, sparking speculation about potential changes. Despite Berkshire’s immense success, it has never paid a dividend, with Buffett favoring capital deployment for growth.

Buffett’s decision not to pay a dividend is based on his belief in better ways to deploy capital. Berkshire’s stock has significantly outperformed the market, generating compound annual gains of 19.9% since 1965. Despite calls for a dividend, Buffett’s strategy of reinvesting in businesses, acquisitions, and stock repurchases has proven effective.

Berkshire’s growth has made capital deployment challenging, limiting options for significant investment opportunities. While Buffett prefers stock repurchases, the company has repurchased fewer shares recently due to high valuation. Investors speculate whether Berkshire may start paying a dividend once Buffett leaves the CEO role.

As Buffett prepares to step down, Berkshire faces challenges due to its size and success. The company’s stock has been viewed as a safe investment, but management’s caution with stock repurchases reflects concerns about high valuations. Potential changes under Abel’s leadership could include considering a dividend, aligning with Berkshire’s conservative investment approach.

Read more: With Warren Buffett Set to Step Down as CEO, Will Berkshire Hathaway Soon Start Paying a Dividend?