Warren Buffett announced his retirement as CEO at Berkshire Hathaway’s (BRK.B) annual meeting over the weekend. While the suddenness of the announcement surprised many, it did not exactly come out of the blue, as the “Oracle of Omaha” had officially named Greg Abel as successor in 2021.

Once Buffett retires in 2026, he will continue to be the chairman of the board of directors, which will ensure some continuity. Also, Abel has vowed to preserve the culture at Berkshire that Buffett built over many decades.

Abel Has Vowed to Follow Buffett’s Investment Philosophy 

“It’s really the investment philosophy and how Warren and the team have allocated capital for the past 60 years,” said incoming CEO Greg Abel. Abel emphasized, “Really, it will not change. And it’s the approach we’ll take as we go forward.”

Buffett is regarded as among the most efficient allocators of capital and has beaten the broader markets handsomely over the decades.

Buffett deploys Berkshire’s cash pile toward buying out companies outright, taking stakes in publicly traded companies, and repurchasing Berkshire’s shares. However, the “Oracle of Omaha” hasn’t repurchased any shares for three consecutive quarters. Moreover, Berkshire has been a net seller of stocks (more stock sales than buys) for 10 straight quarters now.

As for acquiring a company, the last major acquisition was in 2022 when Berkshire acquired Alleghany Corporation in a $11.6 billion transaction. While it wasn’t really the “elephant” that Buffett has long been scouting for, it was nonetheless the biggest acquisition since 2015 when Berkshire snagged Precision Castparts for around $37.2 billion.

Berkshire Cash Pile Has Soared to a Record High

Thanks to Buffett’s frugality with buybacks over the last couple of years and the relentless stock sales, Berkshire’s cash pile surged to almost $350 billion at the end of Q1 2025. The company’s holdings of U.S. Treasury bills has also continued to surge, and Berkshire now holds 5.1% of the entire outstanding U.S. T-bill market.

One of the ways Abel can allocate capital in the coming quarters and years is by paying dividends, either regular or special one-time distributions. Under Buffett’s watch, Berkshire did not pay any dividends even though the conglomerate collected billions of dollars in dividends from the companies in which it is invested.

Bill Ackman Believes Berkshire Will Start a Dividend Eventually 

Billionaire fund manager Bill Ackman believes that Berkshire will start returning capital to shareholders through “aggressive” buybacks and a potential dividend. However, given where Berkshire stock trades today, I don’t expect the company to be aggressive with repurchases for now. 

Until 2018, Berkshire used to repurchase shares only up to 1.2x of the book value. In mid-2018, the company made the policy more flexible, giving more discretion to Buffett to buy back the shares. Berkshire went on a buyback spree between 2020 and 2021, and repurchased over $50 billion worth of its shares during these two years. However, since then, the buyback activity has been modest and came to a grinding halt after Q2 2024.

Should Berkshire Start Paying a Dividend?

I believe Berkshire should start paying a dividend sooner rather than later. The company has been sitting on an ever-rising cash pile, and a dividend initiation would help clear out some cash. First, a dividend might eventually fit into Berkshire’s capital allocation policy as a regular dividend or special dividend would help the company reward shareholders during periods when it is otherwise hard pressed to find other investment opportunities and does not find its own shares particularly attractive for a buyback – a scenario Buffeft previously termed as a “nightmare.”

Secondly, for loyal shareholders like myself who are “hodling” Berkshire shares, a dividend would help monetize investments without forcing investors to sell shares. 

Berkshire is quite a mature business with considerable size, and a dividend initiation could be the next logical step for the $1.1 trillion behemoth. 

Finally, as a dividend-paying company, Berkshire might also find a place in portfolios of funds that are mandated to only buy dividend-paying companies.