Letters by Topic
Letters on Dividend Policy
A company's rules for returning cash to shareholders as periodic dividends. Buffett prefers retention only when reinvestment clears a high return hurdle, and favors flexible, owner-oriented payout discipline.
1984·Retain versus pay out
Dividends make sense only when retained earnings cannot be reinvested at attractive returns; otherwise cash should stay working.
2011·Flexibility over rigid payout ratios
A sound dividend policy is flexible: it rises with earning power but is not cut merely to fund a slump in the stock.
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Dividend Policy is one of the ideas behind the ValueOS tools. See it applied to real companies.