So I'm hoping that Berkshire will pay a dividend in the next 10 years or so. Im viewing this company as a dividend fund although I currently am not receiving any dividends. here's my logic and please feel free to criticize
Last year berkshire earned roughly 25 billion in net income with approximately 2.5 billion shares outstanding. This means they could theoretically pay out a $10 dividend per share if they wanted to. Now, assuming they keep the payout ratio reasonable, i.e. 60% that would be a $6 dividend payout. At todays current stock price of $177 a share that would mean a dividend yield of 3.4%.
Now warren has stated during his last annual meeting that he expects intrinsic value of the stock to be about 10% annual over the next 10 years. He also has discussed how intrinsic value and book value eventually meet. So they should be able to grow dividends by 10% a year as well.
10% dividend increases starting at 3.4% would be 0.034*1.1010 = 8.8%.
so buying shares in berkshire now under my "back of the envelope" math would give me a yield on COST of 8.8%.
I think the math is pretty safe as i've not even mentioned the 100B in cash they haven't employed.
any thoughts on this?
Submitted August 16, 2017 at 08:47AM by EducatedGuess81 http://ift.tt/2uIbpwL
