Dividends and Buffett maintains rosy outlook despite Berkshire job cuts

One of the best successful investors over the years is Warren Buffett, he controls the company called Berkshire Hathaway Inc. and every year he sends out a letter or press release of how he feels the economy will do in the future. Considering the holdings of the company which is based in Omaha, Nebraska including BNSF Railway, Geico car insurer, Dairy Queen ice cream and See’s candies. Berkshire Hathaway also has a sizable stock portfolio including $120.4 billion of Apple.

In an article of Jonathan Stempel of Reuters wrote an article about Mr. Buffett’s annual letter to investors or press release.

Berkshire Hathaway bought back $24.7 billion in stock, as he considers it undervalued and he is optimistic the stock will increase in value. His conclusion to the letter is Never bet against America.

He called the investment in Apple, the BNSF Railway, Geico and insurance and Berkshire Hathaway Energy the crown jewels or core holdings. The net income for the company was $35.84 billion in the quarter and $42.52 billion for the year. Operating income fell 9% to $21.92 billion.

In terms of cash or cash equivalents, Berkshire ended the year with $138.3 billion.

In 2016, Berkshire bought Precision Castparts Corp and until people stopped travelling it was a good buy. Since the pandemic the company has laid off 40% of its workforce and Mr. Buffett took a $9.8 billion write down of assets.

Linking to dividend paying stocks, Mr. Buffett over the years has great success in buying companies that are near or function similar to monopolies because they have wide moats or large barrier to entries for the competition. The companies tend to produce excess cash which Mr. Buffett can use it on a regular basis to help bail out companies that have slipped a bit but should have the ability to generate cash flow. The formula works because of the excess cash flow which can be redeployed into other businesses. Over a period of time it is an excellent formula to pursue.

There are more questions than answers, till the next time – to raising questions.

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