Warren Buffett’s bonanza for investors: Berkshire Hathaway may soon give cash to shareholders this way

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Updated: Feb 25, 2019 12:25 PM

In the 13-page communication, the Warren Buffett, CEO & Chairman of Berkshire Hathaway, discussed share buybacks, transactions that may take place "at a price above book value, but below our estimate of intrinsic value".

Warren Buffett’s penchant for dividend paying stocks is well-known.

Warren Buffett’s annual letter to shareholders released over the weekend had a big news in store for the investors. In the 13-page communication, the CEO & Chairman of Berkshire Hathaway discussed share buybacks, transactions that may take place “at a price above book value, but below our estimate of intrinsic value”. Over time, Berkshire will become a ’significant’ re-purchaser of its own shares, he wrote in page 3 of the letter.

The veteran investor said: “it is likely that – over time – Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value.”

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Many of the heavyweights in Warren Buffett’s portfolio including Kraft Heinz, Wells Fargo, The Coca-Cola Company, International Business Machine Corporation (IBM), Phillips 66, American Express are known to pay heavy dividends.

Warren Buffett’s penchant for dividend paying stocks is well-known. Interestingly, Store Capital Corp, his only real estate bet, pays a dividend of 4.1 per cent, which is more than double the S&P 500 average, according to a Forbes report. In the last five years, the firm has also raised its dividend 32 per cent.

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Meanwhile, Warren Buffett’s company posted a $25 billion loss in the fourth quarter because of a big plunge in the paper value of several of the investments made into stocks.

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