Is Warren Buffett A Closet Dividend Investor?

Warren Buffett is without doubt the best investor the world has ever seen. Starting with a few hundred dollars in 1956, he managed to transform his stake to $20 million by the time he liquidated Buffett Partnership Limited in 1969. His entire net worth by then was in Berkshire Hathaway (BRK-B) stock, a small textile mill that he transformed into a diversified holding company. After reading his letters to shareholders and analyzing SEC filings, I have uncovered an interesting trend in his long-term investments at Berkshire. Notably, Buffett has focused on companies that tend to grow income without much in additional capital investment. This is possible when you invest in a business that has strong pricing power, because consumers are addicted to the brand name product, or because you have some other form of strong competitive advantage. The 1972 purchase of See's Candies is a prime example of this.... Read more