Money For the Rest of Us

Which Will Perform Better: Berkshire Hathaway or Utility Stocks?

Mar 6, 2024

Comparing the investment potential of Berkshire Hathaway and utility stocks. Buffett admits challenges with acquisitions. Discussing dividend yield from utility ETFs vs Berkshire's no-dividend stance. Exploring California's high utility rates. Analyzing performance and future prospects of Berkshire Hathaway, utility ETFs, and index funds.

25:55

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Episode notes

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Quick takeaways

Berkshire Hathaway's growth challenges due to lack of acquisitions and cash buildup contrast with utility ETFs' stable 3.5% dividend yield.

Warren Buffett hints at potential future dividend issuance by Berkshire Hathaway, while utility funds face profitability challenges from rising interest rates.

Deep dives

Berkshire Hathaway's Investment Evolution and Future Prospects

Berkshire Hathaway, led by Warren Buffett, evaluated like an outside money manager, has faced leadership changes with the passing of Charlie Munger. Buffett designated Greg Abel as his possible successor. Buffett highlights the company's goal of owning businesses with good economics and enduring quality, emphasizing risk management to prevent permanent capital loss. While Berkshire Hathaway has not paid dividends and faced challenges due to its growing cash balance and limited acquisition opportunities, Buffett's investment approach centers on long-term stability and avoiding speculative gains.

Introduction

2min

Succession Planning and Challenges at Berkshire Hathaway vs. Utility Stocks

3min

Berkshire Hathaway Acquisition Challenges and Market Performance

5min

Berkshire Hathaway vs. Utility Stocks

6min

Challenges in Regulatory Environment and Regional Power Cost Disparities

3min

Uncovering the Factors Behind California's High Electricity Costs

6min

Comparing Berkshire Hathaway and Utility Stocks for Investment

4min

Berkshire Hathaway doesn't pay a dividend, its cash pile keeps growing, and Buffet says it's gotten too big to make acquisitions that can impact the company. Meanwhile, utility ETFs have a steady 3.5% dividend yield. Which will be the better-performing investment going forward?

Topics covered include:

How has Berkshire Hathaway performed relative to the S&P 500 Index and other active managers
Why Warren Buffett believes Berkshire's electric utility holdings were a mistake
Why California has some of the highest utility rates in the U.S.
Why Berkshire Hathaway will eventually need to pay a dividend even though it doesn't currently
Going forward, will it be more profitable to invest in Berkshire Hathaway, a utility ETF, or an index fund

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Show Notes

Berkshire Hathaway 2023 Shareholder Letter

The Man Preparing for a Berkshire Hathaway Without Warren Buffett by Justin Baer—The Wall Street Journal

Warren Buffett admits Berkshire Hathaway’s days of ‘eye-popping’ gains are over by Eric Platt—The Financial Times