"Warren Buffett has long championed dividend stocks as a cornerstone of wealth building. At Berkshire Hathaway ( )( ), more than half of his equity portfolio - around 55% - consists of companies that pay dividends. These reliable cash flows align with his value investing philosophy, providing steady returns without the need to sell shares. Buffett favors firms with durable competitive advantages, or "moats," that generate predictable earnings to support growing payouts over time."
"Yet, despite this preference, Buffett staunchly opposes paying dividends from Berkshire itself. He argues that reinvesting profits into high-return opportunities - acquisitions, buybacks, or new ventures - creates more value for shareholders than distributing cash. "We don't pay dividends because we think we can do better with the money," he has said. This approach has compounded Berkshire's book value at an astonishing 19.8% annually since 1965."
"That conviction doesn't stop Buffett from collecting dividends elsewhere . Recently, one of his longest-held positions cut him a quarterly check for $204 million. This payout underscores the enduring power of dividend stocks: buy quality companies early, hold through market cycles, and let compounding turn modest investments into fortunes."
Warren Buffett heavily favors dividend-paying companies, with about 55% of his equity portfolio in firms that pay dividends and reliable cash flows supporting steady returns. Buffett prefers businesses with durable competitive advantages that produce predictable earnings to fund growing payouts. Berkshire Hathaway itself avoids paying dividends, opting instead to reinvest profits into acquisitions, buybacks, or other high-return opportunities, a strategy that grew book value about 19.8% annually since 1965. One long-held position recently paid a $204 million quarterly dividend, illustrating the compounding power of early, long-term investments in quality dividend stocks.
Read at 24/7 Wall St.
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