"Apart from reflecting the long-term menu and minimization of transaction costs, [[Berkshire Hathaway|Berkshire]]'s dividend policy also reflects Buffett's conviction that a company's earnings payout versus retention decision should be based on a single test: **each dollar of earnings should be retained if retention will increase market value by at least a like amount; otherwise it should be paid out.** Earnings retention is justified only when “capital retained produces incremental earnings equal to, or above, those generally available to investors.” " ([Location 460](https://readwise.io/to_kindle?action=open&asin=B01J2SLA5O&location=460)) *** **Tags** — [[quotes]] , [[dividend-policy]] **See Also** -- [[Warren Buffett]], [[Charlie Munger]] **Source** — [[202308141129 — B — The Essays of Warren Buffett]]