Warren Buffett shocked Berkshire Hathaway (BRK.A 0.06%) (BRK.B 0.18%) investors at the company's recent annual meeting by announcing his intent to retire from the CEO role at the end of 2025. At this point, Buffett's named successor, Greg Abel, will take over the top spot, although Buffett himself will stay on as chairman of the board.

Although Berkshire has never paid a regular dividend to investors, at least one notable billionaire investor thinks that could change once Buffett officially steps down.

Image source: The Motley Fool.

Why has Berkshire never paid a dividend?

In a nutshell, a dividend has been Buffett's least favorite way to use Berkshire's capital. He has listed his preferred ways to use Berkshire's capital several times, and the top ways (in order) have been:

• Making sure the current capital needs of Berkshire's businesses are met.
• Making bolt-on acquisitions to grow the current businesses.
• Acquiring entire companies to hold as subsidiaries.
• Investing in non-controlling stakes in publicly traded companies.
• Buying back stock when it makes good economic sense to do so.

If the available opportunities in these categories are less than Berkshire's operating income, Buffett has been happy to let the company's cash stockpile build up.

In fact, Buffett has gone so far as to say that if shareholders want income, they should simply sell a small percentage of their shares each year, and that it would have essentially the same effect over time.

One billionaire investor thinks Berkshire's dividend policy will change

Billionaire hedge fund manager Bill Ackman recently gave an interview on CNBC to discuss his efforts to create his own "modern-day Berkshire Hathaway," and discussed what a post-Buffett Berkshire could potentially look like.

One thing that Ackman emphasized is that he thinks the company is going to start returning more capital to shareholders, and he specifically mentioned a "potential dividend." This is particularly notable since Berkshire never paid a regular dividend under Buffett's leadership.

There are a couple reasons why Ackman thinks a dividend could be in Berkshire's not-too-distant future.

As the most obvious point, Ackman mentioned how Berkshire has $347 billion in cash on its balance sheet. Buffett has said that he likes to always maintain a $30 billion cushion, and it has been exceedingly hard to find ways to put this capital to work.

Beyond the presence of the cash itself, Ackman believes that incoming CEO Greg Abel will take a cautious approach, at least at first, when it comes to making major acquisitions.

Ackman's logic is that although Abel is a great capital allocator, he hasn't managed capital on such a large scale. Also, he isn't sure that the new management team will have the same deal-making capabilities that Buffett has. As a result, he believes return of capital will be more of a priority for the new leadership.

Could Berkshire's buybacks get more aggressive?

In addition to dividends, Ackman also believes Berkshire will start buying back stock again. Berkshire bought back stock fairly aggressively from the time its current repurchase authorization began in 2018 through the second quarter of May 2024. During that period, Berkshire spend nearly $78 billion buying back its shares.

However, Berkshire hasn't spent a dollar on buybacks since that time. Not only has its stock generally been near an all-time high through much of the past few quarters, but there's now a 1% excise tax on buybacks (part of the Inflation Reduction Act). Buffett cited this specifically when asked about Berkshire's lack of recent buybacks.

Ackman not only believes buybacks could return, but that management could be "a little more aggressive in buying back stock" going forward, and for the same reasons why he thinks a dividend could be in the future.

Will Berkshire start paying a dividend after Buffett steps down?

Of course, nobody knows what Abel's plans might be, including Bill Ackman. There's no indication from Abel, or anyone else who is employed by Berkshire, that a dividend is on the table anytime soon. However, it's true that nearly $350 billion in capital is a massive amount for a new CEO, so Ackman's logic certainly would make sense.