It's late, and it's probably not important to this thread (to each their own and all that) so I'll try not to beat this to death but... that is a mostly inaccurate representation of what Buffett has said. Buffett is not particular about how a company is going to go about giving him his return on capital, he just cares how high that return is. In fact to say:
As you may know Buffett never bought a stock for dividends (bonds and preferreds don't count)
is nonsensical. Why the artificial distinction between bonds and preferreds vs. stocks? To Buffett it's all the same thing - he's looking at the future income stream.
Now, let's look at his investments. First, there's all the companies he's bought which are not reinvesting most of their profits but instead sending them back to BRK - what is that if not a form of dividend?
Then off the top of my head, some of his major public holdings:
KO, AXP, WFC, WTM, BNI, KFT, WPO
These all pay a dividend.
The germ of truth in what you're saying is that Buffett has a strong preference for companies who can consistently reinvest their earnings in their business at a high rate of return. These rare companies should not be paying dividends because they can get a higher return on capital for their owners by keeping the money. That is a far cry from saying dividends don't matter. |
