Buffett's owner-oriented thinking puts surging dividend cuts in perspective

Investors should consider how they eventually benefit from earnings retained by companies

Ben Paul

Published Sun, May 3, 2020 · 09:50 PM

BILLIONAIRE investor Warren Buffett had to significantly scale down Berkshire Hathaway's annual shareholder meeting - held on May 2 - to avoid the risk of his hometown of Omaha becoming a Covid-19 hotspot.

Yet, there has probably never been a more crucial moment to observe Mr Buffett's insight and wisdom. In particular, the owner-oriented philosophy that Mr Buffett applies in stock investing as well as in running Berkshire could help investors get to grips with the growing number of companies that are slashing or cancelling their dividends.

The key point that Mr Buffett constantly emphasises is that investors should not think of shares issued by a company as mere pieces of paper with a quoted market price, but an entitlement to a slice of the company's business and assets. Mr Buffett applies this principle consistently whether he is discussing …