Berkshire Hathaway does not pay dividends on either share class
Berkshire Hathaway, the investment company run by Warren Buffett, has not paid a dividend since 1967. The company stopped paying dividends that year and has maintained that policy for over 50 years. This applies to both Class A shares (the original high-priced shares) and Class B shares (the lower-priced shares created in 1996).
Instead of returning cash to shareholders through dividends, Berkshire reinvests its earnings back into the business. The company buys other companies, purchases stocks, and holds cash reserves. Buffett has stated publicly that he believes reinvesting capital generates better returns for long-term shareholders than paying out dividends would.
If you own Berkshire stock, you will not receive quarterly or annual dividend payments. Your return comes from the stock price rising over time as the company's value increases.
Key Takeaways
- Berkshire Hathaway stopped paying dividends in 1967 and has not resumed them for either Class A or Class B shares.
- The company reinvests all earnings into buying businesses, stocks, and building cash reserves rather than distributing cash to shareholders.
- Shareholder returns depend entirely on stock price appreciation, not on dividend income.
- Berkshire's no-dividend policy is intentional and reflects Buffett's belief that reinvestment creates better long-term value than dividend payments.
Why Berkshire chose not to pay dividends
Buffett has explained the reasoning behind the no-dividend policy in Berkshire's annual letters to shareholders. He argues that when a company pays out cash as dividends, shareholders receive the money but then face a tax bill on it. If those shareholders want to reinvest the dividend, they have to buy back into the market, which creates additional transaction costs.
By keeping the cash inside Berkshire and reinvesting it, the company avoids putting shareholders in that position. Buffett believes Berkshire can deploy capital more efficiently than individual shareholders can on their own. Over decades, this strategy has produced significant stock price growth.
The policy also allows Berkshire to maintain large cash reserves. The company holds tens of billions of dollars at any given time, which gives it the flexibility to make large acquisitions or weather economic downturns without needing to raise money from outside sources.
How Berkshire's stock price has performed without dividends
Berkshire Class A shares have grown substantially since the company stopped paying dividends. A shareholder who bought Class A stock in 1967 and held it would have seen the share price increase from around $38 to over $600,000 by 2024, though the exact figure varies with market conditions. This growth came entirely from reinvested earnings and business expansion, not from dividend payments.
Class B shares, created in 1996 as a lower-cost alternative to Class A, have followed a similar pattern. Both share classes track the same underlying business performance, so both have benefited from the reinvestment strategy.
Past performance does not may provide future results, and stock prices fluctuate based on market conditions and company performance. But the historical record shows that Berkshire shareholders have received substantial returns without receiving any dividend income.
What happens to your Berkshire shares if you need cash
If you own Berkshire stock and need cash, you have one option: sell some of your shares. You cannot receive a dividend payment, so selling is the only way to convert your investment into cash.
When you sell Berkshire shares, you may owe capital gains tax on the profit. The tax depends on how long you held the shares and your income level. If you held the shares for more than one year, you pay long-term capital gains tax, which is typically lower than short-term rates.
This is different from dividend income, which is taxed as it is received. With Berkshire, you control the timing of when you sell and therefore when you trigger a tax event.
Comparing Berkshire to dividend-paying stocks
| Feature | Berkshire Hathaway | Typical Dividend-Paying Stock |
|---|---|---|
| Dividend payments | None | Quarterly or annual payments |
| Return source | Stock price appreciation only | Combination of dividends and price appreciation |
| Tax on returns | Only when you sell shares | Dividend income taxed annually; capital gains taxed when you sell |
| Cash flow to shareholders | None unless you sell | Regular cash payments |
| Reinvestment strategy | Company reinvests all earnings | Company pays out portion of earnings; shareholders reinvest dividends if they choose |
Dividend-paying stocks provide regular cash income to shareholders. This appeals to investors who want steady cash flow, such as retirees. Berkshire appeals to investors who prioritize long-term growth and are willing to wait for returns through stock price appreciation.
Neither approach is inherently better — it depends on your financial situation and goals. A dividend-paying stock might suit someone who needs regular income. Berkshire might suit someone who wants to defer taxes and maximize compounding growth.
What to know about Berkshire's cash reserves
Berkshire holds enormous amounts of cash — often $100 billion or more at any given time. This cash comes from the earnings the company does not pay out as dividends. Buffett has said he keeps this reserve to handle major acquisitions or to invest during market downturns when prices are attractive.
Some investors and analysts have questioned whether Berkshire holds too much cash and should either pay dividends or buy back more of its own stock. Buffett has defended the cash position as necessary for the company's strategy and financial stability.
Berkshire does buy back its own shares periodically. When a company buys back its stock, the number of shares outstanding decreases, which can increase the value per remaining share. This is another way Berkshire returns value to shareholders without paying dividends.
Frequently Asked Questions
Will Berkshire Hathaway ever start paying dividends?
Buffett has not indicated any plan to change the dividend policy. He has stated that he believes reinvestment serves shareholders better than dividend payments. However, company policy could change under future leadership if circumstances or strategy shift significantly.
Do I owe taxes on Berkshire stock if it doesn't pay dividends?
You do not owe taxes on unrealized gains — that is, the increase in stock price while you hold the shares. You owe capital gains tax only when you sell the shares and realize the gain. This is different from dividend stocks, where you owe income tax on the dividend payment each year.
Is Berkshire a good choice if I need regular income?
Berkshire is not designed to provide regular income, since it pays no dividends. If you need steady cash flow, a dividend-paying stock or bond fund might be a better fit. Berkshire works better for investors focused on long-term growth who do not need to withdraw cash regularly.
How does Berkshire compare to index funds that pay dividends?
Index funds that track the stock market typically include many dividend-paying companies, so they generate dividend income. Berkshire is a single company with its own strategy. Index funds offer broad diversification; Berkshire concentrates capital in businesses Buffett and his team select. The choice depends on whether you prefer diversification or concentrated holdings, and whether you want dividend income.