Fed hikes rates; Berkshire still no cash payout

The Federal Reserve raised interest rates at its most recent policy meeting, but Berkshire Hathaway has not announced a special dividend or altered its dividend policy in response.

The Fed decision pushed short-term yields higher, prompting investors to revisit whether companies with large cash balances would return money to shareholders. Berkshire holds one of the largest corporate cash reserves in the United States and has been a focus of that debate.

Investors pointed to two reasons for expecting a payout: Berkshire’s sizable cash balance, supported by its insurance float, and higher returns available on short-term instruments and money-market funds that make holding cash less attractive to some shareholders.

Berkshire’s leadership has long maintained a preference for using cash for acquisitions or for share repurchases when valuations meet management’s standards. The company has not paid a regular dividend for decades and authorized buybacks under specific conditions nearly a decade ago.

Some shareholders expressed disappointment at the absence of a payout. Activist and institutional holders sometimes press large companies with substantial cash reserves to return capital. Berkshire’s board has emphasized keeping liquidity to fund acquisitions or to respond quickly to market dislocations.

No formal proposal for a special dividend or for a new buyback program tied to the recent rate increase has been filed with regulators or disclosed to investors. Any distribution would require board approval and public disclosure, including how it fits with the company’s long-term capital allocation priorities.

The Federal Reserve has raised its policy rate to address inflationary pressures and to normalize policy after a prolonged period of low rates. Companies with large cash holdings are debating whether to deploy that capital, return it to shareholders, or retain it for future opportunities.