Scroll to about the 3.5 minute mark and listen for 30 seconds: that’s all it takes Warren Buffett to tell you what I’ve been trying to tell you in post-after-post about the folly of buying so-called ‘dividend stocks’ …
… why is he so quick?
First of all, Warren Buffett has credibility; secondly, he has a knack for summarizing things very neatly.
Now, Warren didn’t teach me how to think about dividends – to me, it’s just such clear common sense I can’t even understand the “pro-dividend for dividend’s sake lobby” – but, it’s nice to see that “The World’s Greatest Investor” puts his shareholders’ money where his mouth is 🙂
We talk a lot about buying real estate on this site, so I thought I would include this site for those interested, to check out,. seems like some good helpful advice,when learning to invest in property
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I agree that there is nothing wrong with a company reinvesting instead of paying dividends- if they have a good investment to make! The problem is that most companies are not going to invest as well as BH. Furthermore, I’m sure that even BH moves money between it’s subsideraries to where it will do the most good.
-Rick Francis
@ Rick – There are plenty of examples of companies in the current market putting on a brave face by trying to pay ‘normal’ dividends to investors when they should be doing what every squirrel knows what to do before winter: build up their reserves!
And, in good economies, the business that can’t find a way to reinvest in its future is not one that I am interested in investing in.