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.
Now, there’s another reason: Berkshire Hathaway is sitting on an enormous amount of cash that will rapidly increase earnings per share when he makes his next acquisition. As of today, Berkshire’s cash load is at $55 billion. … Read the rest of this article!