Warren Buffett, Through Berkshire Hathaway, Is Sitting On $55 Billion In Cash

Even though income investing is the dominant theme of this site—it’s on the masthead, after all—there are times when it can be wise to look beyond dividend stocks, particularly if the company whose purchase is contemplated: (1) is achieving high internal rates of return, (2) is trading at a reasonable valuation, and/or (3) gives you something special that you can’t otherwise get through dividend stocks alone.

In the case of Berkshire Hathaway, the story has always been that Warren Buffett is the capital allocator, and that proved to be the reason why you’d see dividend investors have a stock portfolio of all the usual suspects, oh, and Berkshire Hathaway in an account somewhere.

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Procter & Gamble: A Great Friend To Have For Life

Let us, for instance, look at what happens when you reach the conclusion that Procter & Gamble would be an excellent stock to carry with you throughout life, and you only get a chance to make a $5,000 investment in 1970, and to combat the temptation to needlessly accumulate wealth, you decide to collect the dividends along the way.

How does that story play out? Well, the initial $5,000 in 1970 would be immediately paying out $155 in immediate income. By 1980, things were starting to move along, as your $5k investment doubled into $10.1k that was now paying out $325 in dividends. That’s a steady advancement, but not to the point of life-changing from a dividend generating standpoint.

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