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Buffett's Berkshire Gets Big Barron's Boost

Monday, 24 Jan 2011 | 1:07 PM ET
Barron's January 24, 2011 Cover: Mr. Moneybags
Barron's January 24, 2011 Cover: Mr. Moneybags

Shares of Warren Buffett's Berkshire Hathaway are up almost four percent at mid-day (Monday) after Barron's suggested the company could pay its first dividend since Buffett took over in the mid-1960s.

It's also predicting Berkshire's stock price, which "hasn't budged in nearly a year," could top its all-time high this year.

For Class A, that's about $149,000 a share.

Any close above $125,612 would be a new 2-1/4 year closing high.

At 1p ET, they're at $124,982, up 3.7 percent.

Current real-time price:

In the cover story, Mr. Moneybags, Andrew Bary points out that Berkshire is "piling up cash so quickly that it could be sitting on close to $50 billion at its core insurance operation alone by year end."

Bary writes, "The flood of cash could prompt Berkshire to finally start paying a cash dividend in the next 12 to 18 months, particularly if the 80-year-old Buffett is unable to find what he calls an 'elephant,' or a large acquisition."

Late in 2009, Berkshire announced a stock-split for its Class B shares after years of rejecting any suggestion of a split. Just before it was approved by shareholders the following January, CNBC's Becky Quick asked Buffettif there might be more unexpected changes.

BECKY: Some people are asking if you are completely changing your stance on a lot of different issues.

BUFFETT: No.

BECKY: Some people are saying, 'Is this going to mean a dividend's coming soon, too?'

BUFFETT: No, I don't think it means that. It made sense in terms of the Burlington Northern acquisition.

Bary notes that a Buffett-Berkshire dividend would be unprecedented:

Buffett hasn't paid a dividend on Berkshire shares since he took control in 1965, preferring to invest the company's profits. That's been the right move, given the 6,000-fold increase in Berkshire's stock since then. Buffett's aversion to dividends could change if cash continues to build and he can't find a big acquisition. A dividend also could take some pressure off his successors to invest the company's profits.

He adds that "Berkshire's initial dividend, whenever it comes, is expected to be modest, at 2% or less."

Current Berkshire stock prices:

Class B:

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