Berkshire’s billion-dollar BNSF dividend

Warren Buffett’s Berkshire Hathaway has received a $1 billion dividend from BNSF Railway, Bloomberg News reported Wednesday. On top of last year’s $1.5 billion dividend, this brings Berkshire’s earnings from BNSF to $2.25 billon since it acquired the railway 13 months ago.

Noting that this was nearly three times the dividend payout made by BNSF in a similar time period prior to its purchase by Berkshire, Bloombergpointed out that Union Pacific, CSX, Norfolk Southern, Canadian Pacific, and Canadian National have all raised their dividends at a time when North American railroads have been riding high on increased revenues and reduced costs.

Late last month in a letter addressed “To the Shareholders of Berkshire Hathaway Inc., ” Buffett (pictured at left) hailed the holding company’s acquisition in 2010 of BNSF Railway as a key factor in the company’s successful year and, as well, its bright future.

“The highlight of 2010 was our acquisition of Burlington Northern Santa Fe, a purchase that’s working out even better than I expected,” Buffett wrote in the letter. “It now appears that owning this railroad will increase Berkshire’s ‘normal’ earning power by nearly 40% pre-tax and by well over 30% after-tax. Making this purchase increased our share count by 6% and used $22 billion of cash. Since we’ve quickly replenished the cash, the economics of this transaction have turned out very well.”

Shares of Bershire Hathaway Class B stock rose this morning following Bloomberg’s announcement and as of late today were at $86. Class A shares were similarly affected, and were at $341.