โ€œItโ€™s our job, though, to over time deliver significant growth, bumpy or not. After all, as stewards of your capital, Berkshire directors have opted to retain all earnings,โ€ writes Warren Buffett in his 2016 Annual Report Chairmanโ€™s letter. In other words, Berkshire doesnโ€™t pay a dividend. It retains all earnings to invest in its companies or to acquire new ones.

If youโ€™re a Berkshire shareholder and need retirement income you need to rely on Berkshireโ€™s capital gains to sell shares. I donโ€™t like that and it’s not how Mr. Buffett operates. He loves cash and invests it wisely (most of the time). But is this the best way to treat long-time shareholders? Iโ€™m talking about the ones who could use some retirement income. Why not reward them with some dividends?

Another point Iโ€™ll make is that Berkshire owns Apple. You can just hear the chorus: โ€œWell, if Buffett owns it then it must be good.โ€ I donโ€™t like that. Itโ€™s a โ€œcoast is clearโ€ statement, when in reality if you look on page 114 of the latest letter, itโ€™s a tiny position for Buffett. The indexing crowdโ€™s position in Apple, in percentage terms, truly makes Buffett look like a minority shareholder. Yes, Buffett has increased his position in Apple from last year by a significant amount, but what else can he easily buy with $20 billion in cash? โ€œToo big to succeedโ€ comes to mind.

The indexing crowdโ€™s position in Apple, in percentage terms, truly makes Buffett look like a minority shareholder.

Apple, by the way, is sitting on a quarter billion in cash and their tiny dividend is a joke. Does anyone believe they will invest that cash with the expertise of a Warren Buffett? Not if their newly constructed headquarters is a guide to their capital allocation skills.

There are times when paying dividends make sense. Contrary to what Buffett or Apple may believe, I have found that shareholders are pretty good at spending their own money. They donโ€™t mind receiving a hefty dividend year after year. They could use some of those retained earnings.